BEIJING, CHINA — Enticed by lower prices, China is set to buy a record amount of soybeans from the United States this year that would meet its pledge under the phase one trade deal reached by the two countries in January, Bloomberg reported on Aug. 26, citing sources familiar with the matter.
The sources told Bloomberg that China would likely purchase nearly 40 million tonnes from the United States in 2020, about 25% more than when the trade war between the two countries began in July 2017 and 10% more than the record set in 2016.
If realized, it would represent a stunning turn of events amid rising tensions between the two countries over trade, the origins of the coronavirus (COVID-19), and Hong Kong’s desire to operate independently from China as democracy.
China, the world’s largest soybean consumer, usually relies heavily imports from the United States during the last four months of the year. Brazil, which has become China’s biggest supplier of the crop during the trade dispute, has shipped a record amount of soybeans to China this year. But because its crop is harvested earlier in the year than the United States, most of its soybeans targeted for export already have been shipped.
Dan Friederichs, senior analyst at StoneX Group Inc. in Shanghai, told Bloomberg that reaching the 40-million-tonne mark won’t be easy.
“I think the math is pretty hard to get to 40 million,” he said. “Peak monthly loadings during the fall have typically maxed out at around 7.5 million to 8 million tonnes per month from the US to China. I think 35 million tonnes is probably more reasonable.”
As of Aug. 6, nearly 17 million tonnes of US soybeans had been sold to China in the current marketing year, and 10.3 million tonnes were on the books for delivery in the new marketing year, according to the US Department of Agriculture (USDA).
Although tensions are still high between the two countries, their position on trade appears to have improved since early June when the two countries exchanged a dizzying frenzy of contradictory messaging and actions.
On June 1, China announced a halt to US soybean purchases, then preceded to ramp up purchases from the United States over the next several weeks. In late June, US trade adviser Peter Navarro told a news outlet that the China-US trade deal was “over,” only to hours later say his comments were taken “wildly out of context,” while US President Donald Trump confirmed in a tweet the deal with China was “fully intact.”
China also has been buying US corn at a record pace. In late July, China bought 1.76 million tonnes of US corn, its largest purchase ever of US corn and also the largest sale of US corn to any buyer in three decades, according to the USDA.