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Soybean Surges to 18-Month High as Chinese Imports Jump After Trade Deal

December 30, 2019 at 19:23 by Andrew Moran

Soybean futures are trading at their best levels in 18 months as new data revealed that Chinese imports doubled soon after the US and China announced a first phase of a comprehensive trade agreement in October. Is Beijing really going to live up to the provisions inside the deal moving forward?

March soybean futures climbed $0.09, or 0.96%, to $9.505 per bushel at 18:02 GMT on Monday on the Chicago Board of Trade (CBoT). This is the highest soybean has been since June 2018. Despite the roller coaster ride in 2019, soybean prices will record a 6% gain this year.

According to customs data, Chinese imports of US soybeans rose 5.4 million tons in November, up from the 2.6 million tons that were purchased in the previous month. This represents a year-on-year 53.7% gain and also suggests that China was making goodwill purchases from American farmers as the world’s two largest economies were negotiating phase one.

However, some critics make the case that Beijing was buying US soybeans to help carry them over until Brazil’s crop became available again. In recent months, Brazil and Argentina have become important soybean markets for China as the nation attempts to wane off American soybeans. But Brazil’s inventories are low because its crop is harvested in December and January.

In the weeks following the announcement that Beijing and Washington have agreed in principle on phase one, experts have wondered if China can really import 230% more US agriculture next year. But these fears may subside as reports say that Chinese Vice Premier Liu He will lead a delegation to the US to sign the phase one trade deal this week. Neither the US nor China has made any official statements.

Farmers are optimistic for the first time since the trade war commenced 18 months ago.

Tysen Rosenau, a soybean grower in North Dakota, told United Press International:

It was brutal here. Export shipments were canceled. [Grain elevators] stopped taking bids. We couldn’t sell it.

We’ve seen some trains loaded, heading west. We just need it to keep going. We need shipments to start flowing again.

In other agricultural markets, March corn futures were slipped $0.02, or 0.5%, to $3.88 per pound. March wheat futures were unchanged at $5.5625 a bushel. March orange juice futures dipped 0.03 cents, or 0.3%, to $1.00 per pound.

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