Tuesday, February 05, 2019

China buys more soybeans after trade talks, but not much

China promised to buy 5 million metric tons of soybeans from the U.S. after last week's trade talks, but is in no hurry. On Friday it bought over 1 million tons, and on Monday purchased another 612,000. 

One researcher said he thinks China's promise to buy more soybeans was a stalling tactic, Tyne Morgan reports for Ag Web. Ken Smithmier, ag-market research chief for ClipperData, told Smithmier, "In my opinion, these look like statements from China that buys them time in the trade negotiation and makes U.S. officials happy, but for those of us in the grain market every day running the numbers to see how much they typically buy every year, it really doesn't amount to a whole lot."

Soybean futures rose Monday because of the sales, but market experts say the sales are underwhelming, Karl Plume reports for Reuters. The sales were "a bit disappointing compared with expectations," Rich Nelson, chief strategist with Allendale Inc., told Plume. But Nelson said he remains hopeful, and noted bad crop weather in South America, our main competitor in soybeans.

Brazil, the world's top soybean exporter, is expected to produce its largest soybean crop ever this year despite unusually hot, dry weather that could diminish the harvest, Plume reports. Since the U.S. is still imposing a 25 percent tariff on soybean exports, China may be motivated to buy more from Brazil instead.

President Trump has insisted on a March 1 deadline for trade talks with China before he imposes more tariffs.

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