Chinese state-owned companies bought at least one million metric tons of U.S. soybeans on Friday, a day after high-level bilateral talks yielded progress toward a trade deal and a Chinese commitment to buy more U.S. soybeans.
The purchases are slated for shipment between April and July, with a large share expected from U.S. Gulf Coast export terminals, three traders with knowledge of the deals said.
One trader with direct knowledge of the deals said total purchases were around 2.2 million metric tons. The other two traders said the sales were similar to three recent waves of buying in which state-owned companies booked up to 1.5 million tons of soybeans.
U.S. soybean futures rallied to multi-month highs on Friday on news of renewed demand from the world’s top importer.
But the market’s gains were restrained by worries that Chinese purchases will hardly dent massive soybean stockpiles in the United States and around the world.
The looming harvest of a large soy crop in Brazil, the world’s top supplier, further capped prices.
“It certainly is good to see some concessions and more buying interest from China, but this is a concession in terms of a larger trade agreement. Brazilian offers are cheaper than we are so it’s just part of the negotiation,” said Terry Linn, analyst with Chicago-based brokerage Linn and Associates.
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Friday’s purchases by state-owned companies were believed to be destined for China’s state reserves, and thus immune from high import tariffs on U.S. beans.
The 25 percent tariffs, imposed last summer in retaliation for U.S. tariffs on Chinese goods, remain in place for U.S. soy imports by commercial crushers in China.