China signs second- largest deal for US soybeans

Agreements from the world’s top buyer offer little insight for the market

A delegation of commodity importers from China has signed agreements to buy 12.53 million tons of US soybeans and 371 tons of US beef and pork.

The total value of the combined soybean and meat deals was set at $ 5.012 billion by the US Soybean Export Council. The beef deal came weeks after China reopened its market to US supplies after a 14- year ban.

But traders and analysts said the agreements from the world’s top buyer of soybeans provided little insight for the market, as final prices and shipment dates were not specified.

The agreements, inked on Thursday, added up to the second- largest on record between the two countries.

“They are meaningless,” said Charlie Sernatinger, global head of grain futures at ED& F Man Capital. “It is window dressing.”

The deals were signed as frame contracts, which are typically non- binding letters of intent to buy at a later date, without formal sales terms.

Terry Branstad, the newly appointed US ambassador to China, had said that serving US beef in the embassy was one of his goals.

Agriculture trade has been a bright spot in China- US relations since Donald Trump’s inauguration, unlike other areas.

US President Donald Trump said on Thursday he was considering using quotas and tariffs to deal with the “big problem” of steel dumping from China and other countries.

Agriculture groups have raised concerns that countries seeking to retaliate against US- imposed trade restrictions will target commodities such as soybeans and corn that US farmers produce a surplus of.

“I think that is something that we should always be concerned about and thinking about,” said Jim Sutter, chief executive officer of the US Soybean Export Council. “But I think agricultural trade hopefully will continue to be that stabilizing force.”

The record for a soybean frame contract was for 13.18 million tons signed in 2015. A year ago, Chinese buyers agreed to buy 4 million tons of soybeans.

The market shrugged off the news, which hit late in the trading day on Thursday.

The benchmark Chicago Board of Trade November soybean futures contract settled down 46.5 cents, or 4.5 percent, to 9.875 dollars per bushel. The daily loss was the biggest for soybeans since July 7, 2016.

The US Agriculture Department expects China to import 93 million tons of soybeans in the 2017- 18 marketing year, up from 89 million in 2016- 17.

Total US soybean exports are pegged at 58.51 million tons, up from 55.79 million tons a year earlier.