In a significant development for the U.S. agricultural industry, China made its largest single-day U.S. soybean purchases in at least three months on Tuesday.
This comes as a glimmer of hope for the most valuable U.S. farm export, which had been struggling due to overseas sales of the 2023 harvest falling well behind the normal pace.
Chinese importers acquired approximately 10 cargoes of soybeans, totaling around 600,000 metric tons. These purchases are scheduled for shipment from Gulf Coast and Pacific Northwest export terminals between December and March.
These substantial sales are a relief for U.S. farmers who had witnessed Brazil dominating the global export market for soybeans and corn for an extended period this year. If confirmed, Tuesday’s sales would be the largest single-day soybean purchases by China, the world’s top soy importer, since late July, according to the U.S. Department of Agriculture (USDA) daily sales data.
These purchases represent the latest in a series of soybean import deals by Sinograin, China’s state-owned importer, over the past week. It’s estimated that total purchases during this period ranged from 20 to 25 cargoes.
The surge in demand for U.S. soybeans caused cash premiums for these products at Gulf Coast terminals to increase by as much as 10 cents a bushel on Tuesday, as exporters rushed to secure supplies. High U.S. prices, partly due to barge shipping disruptions and stiff competition from Brazil, have impeded U.S. sales earlier in the season.
However, with prices becoming more competitive for shipments from December through March, when Brazil’s next harvest becomes available, the outlook for U.S. soybean exports has improved. Confirmed sales to China as of late October were down 35% from the previous year, and sales to all destinations had decreased by 28%. The USDA had been projecting a 12% year-on-year export decline.
The USDA recently confirmed private sales of 236,000 metric tons of U.S. soybeans over the past two days, and traders anticipate additional “flash sales” following the notable purchases made on Tuesday. This development provides some optimism for the U.S. soybean market and the country’s agricultural sector.
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