China Buys US Soybeans after Halt to US Purchases Ordered, Sources Say

Jun 02, 2020

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By Skugal

State-owned Chinese firms bought at least three cargoes of US soybeans on Monday, even as sources in China said the government had told them to halt purchases after Washington said it would eliminate special treatment for Hong Kong to punish Beijing.

The purchases, totaling at least 180,000 tonnes of the oilseed, were for shipment in October or November, the peak US soy export season when American soybeans are usually the cheapest in the world, three US traders with knowledge of the deals said.

It was not immediately clear why buying continued after Beijing’s message to state-owned firms, but US traders said Chinese importers still have not covered a large share of October and November soybean needs.

“It’s murky, really hard to say,” said one US export trader. “Maybe they wanted to knock a few cents off the price, or maybe there’s some other agenda. The do need the beans.”

Earlier, two sources familiar with the matter said China had told state-owned firms to halt large-scale US soybean and pork purchases, and one of the sources said state purchases of US corn and cotton have also been put on hold.

The soybean sales on Monday were small compared to recent purchases by state-owned firms totaling 1 million tonnes or more at a time.

China is ready to suspend imports of more American agriculture products if Washington takes further action on Hong Kong, the sources said.

Any sustained halt in buying would further threaten progress toward goals reached under the Phase 1 trade deal signed in January. China pledged to significantly boost purchases of US agricultural products, after slashing imports during the bruising trade war.

The US Department of Agriculture and US Trade Representative’s office did not immediately respond to requests for comment.

On Friday, US President Donald Trump said he was directing his administration to begin the process of eliminating special treatment for Hong Kong in response to China’s plans to impose new security legislation.

On Monday, China said US attempts to harm Chinese interests will be met with firm countermeasures.

Chinese importers canceled 10,000 to 20,000 tonnes of American pork shipments, equivalent to roughly one week’s orders in recent months following Trump’s comments on Friday, the source said.

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