Friday, December 14, 2018

China resumes some soybean sales after G-20 agreement; White House delays additional trade-aid payments

"Traders said on Wednesday that China, the world’s top soybean importer, had booked its first significant U.S. soybean purchases in more than six months after a trade truce was reached on December 1," Julie Ingwersen reports for Reuters. The U.S. Department of Agriculture confirmed on Thursday the sale of more than 1.3 million tonnes of soybeans, though soy futures fell because traders are hoping for more deals.

The sales came after President Trump and China's President Xi Jinping negotiated a 90-day ceasefire in the trade war after the recent G-20 summit. 

It's not clear how many soybeans China will buy, since U.S. tariffs are still in place and Brazil has a record crop about ready for harvest, Ingwersen reports. Still, the renewed sales are a promising sign that will be undoubtedly well-received by soybean farmers.

China was once America's biggest customer for soy, and without those sales and few other customers forthcoming, many soybean farmers have been obliged to try to store their crops in hopes that the trade war will end soon and they can then get a better price, Adam Belz reports for the Star Tribune in Minneapolis. Soybean prices have hit record lows since the start of the trade war.

StarTribune chart; click on the image to enlarge it.
One Minnesota soybean farmer, Tim Velde, said he sold about 40 percent of his crop on the futures market this year at a tiny profit, and has stored the other 60 percent at his farm and the local grain elevator. "It’s at a point where I can’t afford to sell them, because I can’t take that much of a loss," he told Belz.

Though the amount of soy the Chinese have purchased is a small fraction of what they buy annually from the U.S., the White House has delayed giving out the second round of aid for farmers hurt by the trade war in hopes that renewed sales will make the payments unnecessary, Humeyra Pamuk and Jarrett Renshaw report for Reuters.

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