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Soybean Falls As China Shows No Sign of Reviving Imports

August 27, 2019 at 14:47 by Andrew Moran

Soybean futures are sliding on Tuesday as investors see no signs of China reviving imports of the agricultural commodity. US officials had anticipated that Beijing would show signs of good faith by increasing soybean purchases, even as the two sides escalated the trade dispute last week.

November soybean futures tumbled $0.0575, or 0.66%, to $861.50 per bushel at 14:26 GMT on Tuesday on the Chicago Board of Trade (CBoT). Soybean has nearly wiped out all its three-month gains, bringing its year-to-date loss to just under 8%.

Beijing announced its retaliatory efforts in response to the US government’s latest tariffs on the remaining $300 billion in Chinese goods that are scheduled to go into effect December 15. China announced that it would halt agricultural imports and impose wide-ranging tariffs on $75 billion in American products.

Prior to the escalation, the world’s second-largest economy pledged to purchase more US soybeans as a sign of good faith. But the US Department of Agriculture (USDA) confirmed that China has only acquired roughly half of the US soybeans it pledged. Only a small sale between the two sides was reported.

In the week of August 9 to 15, China agreed to buy 9,589 tonnes of US soybeans in the current marketing year and another 66,000 tonnes for the following year.

US officials believed China would buy larger volumes of soybeans as the countries engaged in trade talks. But USDA Undersecretary for Trade Ted McKinney said that China was far from achieving that.

He told Reuters

Very publicly in the Oval Office, they made commitments for 20 million metric tons of purchases, and only about 9 or 10 (million tonnes) have been shipped and accepted.

If China has purchased, I’ll celebrate that. I hope that’s the case.

But industry insiders believe that China will continue to be aggressive in its domestic output and will turn to greater imports from Russia. Though Russian exports will not be enough to satisfy the market’s demand, it could be enough to fill in gaps left by decreasing imports from the US.

That said, China Soybean Association president Yang Baolong got it right when he told the fourth annual China Soybean Industry International Summit Forum:

In the thousands of years of Chinese history, soybeans have never been so closely watched by the whole world and by state leaders in various countries as they have today.

Soybeans are only a symbol, and we have to protect ourselves during the war … the nature of the China-US trade tensions is a contest between big powers.

Meanwhile, in its weekly crop progress report, the USDA said that 55% of the US soybean crop was rated in good-to-excellent condition. This is up from 53% in the previous week and higher than the market forecast of 54%.

In other agricultural commodities, September corn futures were unchanged at $3.6825 per pound. October wheat futures edged up $0.03, or 0.63%, to $4.7825 a bushel. November orange juice futures surged $0.035, or 3.55%, to $1.02 a pound.

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