Chinese soybean buys aid farmers

But amount low, U.S. silos packed

China resumed buying U.S. soybeans this week, providing some relief to farmers in America’s heartland as President Xi Jinping works toward a trade deal with his American counterpart.

The giant Asian commodity importer bought 1.65 million to 2.2 million tons of American supply Wednesday and Thursday, with shipments expected to go out in the first quarter, the U.S. Soybean Export Council said, citing unidentified industry sources.

State stockpiler Sinograin and its top food company Cofco are planning more purchases, according to people with knowledge of the plan. On Thursday, the U.S. Department of Agriculture disclosed sales of 1.24 million tons to China.

The soybean market is looking for much higher sales to China to put a dent in the mountain of beans stockpiled in the U.S. Inventories are set to double to a record 25.99 million tons, according to the U.S. Department of Agriculture.

Unwilling to sell at current prices and hopeful that progress on trade talks with China will be a boost to the market, farmers have decid-

ed to hold on to their crop as long as they can.

“A lot of soybeans are going nowhere right now,” said Bob Zelenka, executive director of the Minnesota Grain and Feed Association.

Prices for soybeans fell on Memorial Day when President Donald Trump signaled his intent to start a trade war, and they haven’t recovered.

“We are disappointed with the sales to China,” Ted Seifried, chief market strategist at Zaner in Chicago, said in an emailed response. “We needed at least 10 million metric tons, we got 1.1 million.”

While China’s return this week is a “good start,” it needs to buy more during a 90-day period that the countries have carved out to end the trade spat, USDA Deputy Secretary Steve Censky told farmers Thursday at an Iowa Soybean Association meeting.

To put the purchases in perspective, China buys 30 million

to 35 million tons of U.S. soybeans in a normal year, Censky said “There needs to be a lot more” buying, he said.

The purchases represent a gesture by China toward easing tensions between the world’s two largest economies. Soybeans have become the poster child of the trade dispute, with the Asian nation shunning imports from farms in rural communities that voted for Trump in 2016. Futures in Chicago tumbled as a result, while the 2018 harvest had been piling up, unsold, in silos, bins and bags across the U.S. Midwest.

“The shipments, mainly from the Pacific Northwest, will help reduce stockpile pressures for U.S. soybean farmers,” said Li Qiang, chief analyst with Shanghai JC Intelligence Co. Also “these shipments can ease China’s own shortage of supplies in the first quarter of the year.”

This is the first significant purchase since the two countries began imposing competing tariffs, with China placing a 25 percent retaliatory levy on the American oilseed after

Trump imposed duties on billions of dollars worth of goods from the Asian country.

Soybean futures had stayed relatively quiet in the past few days as traders awaited confirmation that deals were happening. Trump had hailed a breakthrough on agriculture as part of the trade truce agreed in his meeting with Xi earlier this month, and tweeted “Farmers, I LOVE YOU!” Prices in Chicago slid 0.2 percent Thursday and are still down about 14 percent since their peak in March.

The export council “is encouraged by the news that buyers from China have made purchases of U.S. soybeans,” the American group said in an email. “This is obviously positive news for our growers.”

Still, while the purchases represent some relief to farmers, the three-month nature of the import agreements is leaving some traders concerned. Some say the U.S. has probably already missed the best chance to sell beans to China because of approaching South American harvests.

Skepticism also remains over the impact on the soybean market, as the imports are likely to be made by stateowned enterprises while Chinese commercial buyers that typically buy more are still hampered by tariffs.

The purchases may help refill China’s supplies, but it won’t do a lot to empty the stockpiles that have built up in America, said Darin Friedrichs, risk management consultant at INTL FCStone Inc.’s Shanghai office.

“The problem is it’s so late in the season for the U.S.,” Friedrichs said. “The stocks are huge.”