China Is Seeking Lower Soy Price as Traders Await Corn Bids

(Bloomberg) -- China, which resumed buying U.S. soybeans this week after trade tensions eased, is now seeking to buy the oilseed at lower prices, according to traders involved in the process.

Buyers from China, the world’s top soybean importer, on Friday bid for American supplies at lower prices than when purchases were concluded earlier this week, said the traders, who asked not to be identified because the negotiations are private. The traders have yet to see any bids for U.S. corn from the Asian country, they said.

President Donald Trump and his Chinese counterpart Xi Jinping agreed on a 90-day truce to their trade war earlier this month. That helped bring China back to the U.S. crop market, with purchases of more than 1 million metric tons of soybeans this week. As the nation presses for lower prices, it could raise concerns for the market over how much buying China is ready to carry out.

Traders are now watching for corn bids after Chinese officials were said to be preparing to restart purchases of American supplies as soon as January.

"Corn is now entering the discussion," said Arlan Suderman, chief commodities economist at INTL FCStone. "It makes economic sense to import corn into China, based on current price relationships, once retaliatory tariffs are removed."

Soy Purchases

American soybean purchases were carried out by state-buyers. The top U.S. farmers cooperative CHS Inc. was among the sellers, people familiar with the matter said. Bunge Ltd. also had some discussions with Chinese buyers, but hasn’t yet concluded any deals, the people said.

CHS and Bunge declined to comment.

Reaction to Chinese purchases has been muted in the Chicago futures markets. Corn was little changed this week, while soybeans fell as inventories remain large.

Traders are starting “to realize that we’re not going to sell enough of the oilseed to China to fix its bloated balance sheet with a massive South American crop about to hit the market and African swine fever hurting demand" for livestock feed in China, Suderman said.

©2018 Bloomberg L.P.