Last week we heard about this phase one of the trade deal going well, we had both Trump and Secretary of Treasury Mnuchin confirm it as well as China confirm that China agreed to buy up to $50 billion of US farm products annually during trade talks last week.
Right after that China booked at least eight boatloads, or 480,000 tonnes worth $173 million of Brazilian soybeans. While Brazil is China’s largest soybean supplier, however purchases from South America this time of year is odd considering its US harvest time. I think this proves that China is more concerned about price than policy.
Trump said on Twitter on Sunday that China has already begun making U.S. agricultural purchases. But three U.S. soybean exporters said there have been no U.S. sales to China since last week’s talks in Washington, and none have been confirmed by the U.S. Department of Agriculture.
“I’ve not had any inquiries at all for U.S. (shipments),” said one of the U.S. soybean exporters. “There were a few November boats bought from Brazil and several new-crop South American boats for March forward but nothing here.”
To be fair there was a recent drop in soybean prices which could’ve sparked this fresh demand, and some US exporters have a hard time turning profit unless given tariff waivers.
Here is a look at the cargo shipment routes, keep in mind that before the trade war, China imported most of its U.S. soy between October and January, turning to South America around February.
Larry Kudlow acknowledged on Thursday that China’s “serious commitment” to buy up to $50 billion of agricultural products would depend in part on market conditions.
Chinese importers bought about 850,500 tonnes in U.S. soy in the week ended Oct. 10, just ahead of the phase one deal announcement, according to weekly USDA data released on Friday. This is a good sign to me, shows good faith before a hopefully successful trade talk, which from everything that was released- the trade talks did in fact go good. I don’t think this is anything to really worry about yet, lets wait a few more weeks till we get more data and see if this continues or not.