The U.S. Department of Agriculture’s (USDA) daily export sales reporting system has confirmed recent rumors that top soybean buyer China had secured almost 3 million metric tons (MMT) of U.S. soybeans in buys finalized in recent weeks. These purchases come as the U.S. and China work to normalize trade relations following the recent hiatus that began in July. The cargoes of soybeans, reported to ship by September 2019, are rumored to have been made by state-owned traders that are seeking to rebuild government-owned reserves.
As most in the market are already aware, Chinese demand has been noticeably absent from the U.S. soybean market in the last half of 2018. This has provided incentives for other buyers to secure U.S. soybeans at attractive prices relative to competing South American supplies. We have previously highlighted how countries like Pakistan and Argentina have taken advantage of this feature and have increased purchases of U.S. soybeans in recent months. Despite what appears to be a large total, the lackluster response of prices in the futures market following the confirmations suggests that traders are confident that U.S. exporters are able to source amply supplies of what is, by the latest official crop estimates by USDA, a record U.S. soybean harvest totaling nearly 125 MMT.