China is reportedly set to buy an additional 10mt of US soybeans, according to a top US government official.
US Agriculture Secretary Sonny Perdue disclosed the development in a message late last week on Twitter.
“Hats off to @POTUS for bringing China to the table. Strategy is working. Show of good faith by the Chinese. Also indications of more good news to come,” he said.
Beijing last year imposed tariffs on US agricultural goods, including soybeans, and while the country resumed buying US cargoes in December, volumes are still lagging, said analysts at Arctic Securities.
“According to the latest USDA data, only 7.4mt of the most recent US soybean harvest had been sold to China, well short of the 26mt in purchases at the same point last year,” it said.
“An additional 10mt in exports would support the drawdown of the massive US soybean stocks that have depressed prices for months, and would lead to increased seaborne quantities, hence supportive for dry bulk shipping.”
Clarkson Platou Securities described the development as “very positive development for the dry market”, which together with the seasonal uptick in Brazilian soybean exports, is likely to improve overall bulk rates in the coming weeks.
“Backing this, we saw the FFA market trading up on the positive news from the trade negotiations on Friday, with second quarter contracts trading at $8,200/day and $9,500/day for capesize and Panamax respectively.”
On Monday Chinese customs data showed that imports of US soybeans nearly doubled in January to 135,814t in the wake of a truce agreed between the two countries in early December.
China typically buys from the US in the last quarter and first couple of months of the year, when the US harvest dominates the market.
However, the figures also showed that China brought in 4.9mt of Brazilian soybeans in January, more than doubling last year’s 2.07mt.
Over the weekend US President Donald Trump said he would delay an increase in US tariffs on Chinese goods scheduled for later this week thanks to progress in trade talks.
An increase of up to 25% in duties on $200bn worth on certain Chinese goods was due to be introduced on 1 March.
Trump said both sides had made ‘substantial progress’ in trade talks and revealed that he was planning a summit with Chinese President Xi Jinping in Florida.
China’s official news agency Xinhua stated that progress had been made on issues including intellectual property protection, technology transfer, and agricultural produce.
