The agreements are non-binding letters of intent to buy at a later date, so the signing does not necessarily suggest a sale has occurred. — Reuters
UNITED STATES soybean exporters have recently seen less action than usual from top customer China, though the two parties signed a deal on Monday that could pave a path toward more Chinese purchases.The potential timing of those sales is uncertain, as similar agreements in the past have sometimes led to immediate announcements of large US export sales while other times they have not.
Chinese importers on Monday signed agreements to buy billions of dollars’ worth of US agricultural goods during a ceremony in Iowa, mostly believed to be soybeans.
This was the first such bulk signing since 2017, though unlike past events, this one was minimally publicised.
Details of the signing from the US Soybean Export Council or USSEC on Tuesday were also unusually thin as neither volumes nor commodities were specified as normal.
It is not clear why this event, which in past years was accompanied by much fanfare, was seemingly downplayed on the US side.
The agreements are non-binding letters of intent to buy at a later date, so the signing does not necessarily suggest a sale has occurred.
Therefore, large daily sales announcements from the US Department of Agriculture are not guaranteed to follow.
The last such signing took place in Beijing in early November 2017, though the next daily US soybean sales came at the end of that month.
The volumes were seasonally normal, so it is not obvious whether these sales were linked with the deal.
However, the record daily US soybean sale of 2.92 million tonnes to China came two days after a signing ceremony in Iowa in February 2012.
Some of the other biggest daily soybean sales also immediately followed signings.
As of Oct 12, China had purchased just under 10 million tonnes of US soybeans for delivery in the 2023 to 2024 marketing year, which began on Sept 1 for US beans.
Outside of the trade-war years of 2018 and 2019, that is the lowest volume for the date since 2008.
US soybeans have been edged out on the global market by a monster crop from top exporter Brazil, and relatively stagnant Chinese demand has not helped.
However, China’s US purchase volume is relatively small, potentially suggesting minor room for growth.
As of Oct 12, only 47% of all US soybean commitments for 2023 to 2024 were to China, below the date’s three-year average of 53%.
Given current sales levels, that difference is worth 1.2 million tonnes. — Reuters
Karen Braun is a market analyst for Reuters. The views expressed here are the writer’s own.
