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China U.S. soybean purchases remain heavy, but a sanctions warning from China has put that demand at risk. Soybean prices keep slipping even as the buying continues, and that gap matters for anyone selling or sourcing U.S. soybeans. China is the main reason U.S. soybean exports are running ahead of their annual target. Brazil's election has also handed China a friendlier alternative supplier.
Bertrand Oesterle is Vice President of Clearing and Execution Sales at StoneX Financial Ltd in London. He contributes to StoneX market intelligence on grains and oilseeds, the markets where Chinese demand, South American supply and U.S. exports meet.
China's buying is doing the heavy lifting for U.S. soybean exports. Counting booked cargoes and flash sales, China took roughly 3.7 million tons of U.S. soybeans in two weeks. Oesterle points out that U.S. exports are "currently 10% above the pace that we should be at in order to get to the USDA annual figure", mostly because of China. That is good news for U.S. exporters, but it rests on a single buyer.
"The Chinese have warned the U.S. about a potential trade spat, because the U.S. have announced that they will put some sanctions on Chinese companies," Oesterle explains. The timing stings. Heavy Chinese buying of U.S. soybeans "should have been supportive" for the market. Instead, traders read China's warning as a threat to Chinese appetite for U.S. soybeans, and prices have struggled despite the buying.
Brazil's election result has widened China's options for buying soybeans outside the U.S. Before the vote, Chicago soybeans rallied on the idea that Chinese demand might swing back to U.S. cargoes. According to Oesterle, with Lula's win "China is comforted by the fact that they've got an ally in Brazil, and therefore they can turn to Brazil to buy soybean." China is looking further afield too, since "the Chinese have confirmed that they've bought some 15 cargoes of Australian canola".
--- Written by Johanna Botta, StoneX Media Presenter
--- Expert: Bertrand Oesterle, StoneX VP of Clearing & Execution Sales
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China is buying U.S. soybeans at a heavy pace, yet soybean prices keep slipping. A Chinese warning over U.S. sanctions, a friendlier Brazil and Chinese canola deals in Australia explain why that demand looks less secure.
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