China is back in the US soybean market, buying at least 10 cargoes worth approximately $300 million in contracts signed since Tuesday, according to a Reuters report.
The purchases come a day after the presidents of the two nations held a phone call.
The recent surge in Chinese buying, marked by the purchases of unusually large volumes of soybean, is a direct extension of the recent thaw in trade relations between the United States and China.
Soybean deal
This increase in trade activity signifies a significant improvement in the bilateral relationship, which had been strained by previous tariffs and trade disputes.
The positive momentum was underscored by US President Donald Trump, who, following a phone call with his Chinese counterpart Xi Jinping on Monday, publicly characterised the relationship between the two nations as “extremely strong.”
This high-level communication and subsequent public affirmation of robust ties provide the crucial context for the dramatic increase in Chinese procurement, suggesting a renewed confidence in stable future trade and an effort to fulfill commitments made during previous trade negotiations.
The volume of the purchases itself serves as a tangible indicator of Beijing’s commitment to normalising and bolstering economic ties with Washington.
Trump presses for accelerated procurement
During a recent high-level discussion, President Trump affirmed that he had strongly urged President Xi Jinping to significantly accelerate the timeline and increase the volume of Beijing’s committed purchases of American goods.
This pressing demand was made during a direct call between the two leaders, focusing on rectifying the existing trade imbalance and fulfilling the terms outlined in the preliminary trade agreement.
Trump later indicated that the Chinese leader had, in response, offered a positive signal, suggesting a general willingness to comply with the request.
Specifically, the US President stated that Xi had “more or less agreed” to both accelerate the procurement schedule and substantially increase the total value of American exports being bought by China.
This agreement, though described informally by Trump, is viewed as a crucial step toward easing trade tensions and demonstrating China’s commitment to the terms negotiated in the initial phase of the trade deal.
China has purchased an estimated 10 to 15 cargoes of US soybeans, according to traders quoted by Reuters, with some estimating the volume at about 12 cargoes.
Each cargo is substantial, weighing approximately 60,000 to 65,000 metric tons.
Sources indicated on Wednesday that all the newly purchased cargoes are scheduled for January shipment from US Gulf Coast terminals and Pacific Northwest ports.
These purchases are notable because US soybeans are currently priced higher than Brazilian supplies.
Higher premiums and COFCO’s role
Traders reported that China paid premiums of around $2.3 per bushel over the January Chicago futures contract for shipments from Gulf terminals and $2.2 per bushel from Pacific Northwest ports.
This is significantly above the pricing for Brazilian soybeans, which are trading at a premium of about $1.8 per bushel over the January CBOT futures contract.
Johnny Xiang, founder of Beijing-based AgRadar Consulting, was quoted in the report:
Commercial buyers will continue to avoid US soybean imports, as prices remain higher than Brazilian beans. At these levels, crush margins are not financially viable.
China has recently increased its purchases of US soybeans, which follows late-October discussions between the leaders of the two countries in South Korea.
This marks a shift, as China had mostly avoided US soybeans for several months due to the ongoing trade tensions between Washington and Beijing.
The state-owned grain purchaser, COFCO, has been primarily responsible for this surge in buying.
Since late October, COFCO has booked nearly 2 million tons of American soybeans, according to data from the US Department of Agriculture.
Despite the White House announcing 12 million tons of purchases, the most recent deals are still significantly lower than this figure.
However, US Treasury Secretary Scott Bessent stated on Tuesday that Chinese purchases of American soybeans are proceeding “right on schedule.”
He referred to an existing agreement for Beijing to buy 87.5 million tons of the US product over the next three-and-a-half years.
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