China buys at least 7 US soybean cargoes amid renewed demand: traders

China purchased at least 6-7 cargoes of US soybeans on July 6, equivalent to about 330,000 metric tons, according to multiple traders, buyers, sellers and analysts based in Asia.

The purchases were for shipments from September to November to both the US Gulf Coast (USG) and Pacific Northwest (PNW) ports. A Chinese soybean buyer estimated that around five cargoes were booked from USG and two from the PNW.

USG and PNW-origin soybeans for October shipments were heard transacted at 278-280 cents/bu and 270 cents/bu, respectively, over November (X) CBOT, basis CFR China, according to two Chinese soybean traders.

Trade levels for September shipments were heard at similar values, said one of the traders.

Soybean market participants said that the purchases were not entirely unexpected, with reports of earlier buying activity circulating in the past week.

"The market was already talking about state reserves buying around 20,000 soybean futures lots last week. That is equivalent to at least 2 million mt of soybeans," said a Singapore-based soybean trader, adding that it is only a matter of time before physical purchases follow.

Another Chinese soybean trader echoed similar sentiments. "There were talks that state reserves were purchasing around 2 million mt of futures per week. At that pace, purchases could reach around 12 million mt by the end of August," said the trader.

The trader added that funds have been entering the market in anticipation of that, pushing Chicago Board of Trade futures higher week over week.

"The reaction in the futures market was very aggressive following the reports of China having purchased US soybeans," added a second Chinese soybean trader.

Nonetheless, Brazilian soybeans remain more competitive for commercial buyers, as Chinese importers are still subject to an additional 10% tariff on US soybean imports.

The reported USG soybean trades were equivalent to 291-293 cents/bu over Nov (X), basis CFR China, normalized for equivalent quality and shipment specifications to Brazilian soybeans, accounting for a quality spread of 13 cents/bu.

By comparison, Brazilian basis premiums for October shipments were offered at 233 cents/bu over Nov (X) CBOT, basis CFR China as of July 6.

Platts, part of S&P Global Energy, assessed the SOYBEX China CFR flat price at $509.73/metric ton July 6, up $11.21/mt day over day.