US soybean market participants doubtful after US-China trade announcements

US officials announced that China plans to increase its purchases of US soybeans in the current and upcoming marketing years. However, the news left US market participants skeptical and seeking further details, as there has been no specific confirmation from Chinese authorities.

On Oct. 30 US Treasury Secretary Scott Bessent said during a TV interview that, following the meeting between US President Donald Trump and Chinese President Xi Jinping, China would buy 12 million mt of US soybeans this year, and 25 million mt annually during the next three years.

"The Chinese have agreed to buy 12 million mt of soybeans during this season, right now, between now and should be January," he said. "And then for the next three years they're going to be buying a minimum of 25 million mt per annum."

Jack Larimer, senior analyst at S&P Global Energy, said that demand in China has been largely covered through December, which would make purchases of US soybeans difficult to allocate.

"For the calendar year, 12 million mt this year seems very unlikely. China is already filled for most of the calendar year," he said. "For marketing years, 12 million mt is reasonable. 25 million mt is also possible, though it is not overly bullish. The US has shipped an average of 25 million mt to China in the past, but what is likely to happen is Brazil would take an even larger share of other world business and total US soybean exports would remain between 1.7 and 1.8 billion bushels."

Information previously published by Platts shows that, according to Chinese sources, as of Oct. 28, 12% of the total open demand of 6 million mt for November shipment remained uncovered. Meanwhile, 23% of the total open demand at 4.5 million mt for December shipment has been covered.

"Theories I've heard, and this is just people guessing, that they will purchase before Dec. 31 for shipment up to September," a trader in the CIF NOLA market said.

Up until Oct. 30, no confirmation of the US soybean purchase plan had been heard from Chinese officials or from state-owned China Oil and Foodstuffs Corporation.

While US sources believe that the 25 million mt yearly amount would be doable, some highlighted other variables that they believe this plan should take into account, including Brazilian production.

"China on average imported 27 million mt of US beans," a Chinese trader said. "So, the number is reasonable. But it needs to consider the Brazilian production number that has grown over the years."

"I don't believe anything that this [Trump] administration says," a source in the FOB Gulf market said. "Until the Chinese diplomats release a statement, I am suspicious."

"I think the market is still a little skeptical on these details as China has not yet confirmed any volumes," the first trader in the CIF New Orleans market said. "If these volumes are confirmed, it would likely be Chinese state buying for stocks at uneconomical values. Brazil FOB is already cheaper than the US Gulf."

On Oct. 30, the American Soybean Association published a release praising this "meaningful step forward" to reestablish the US-China soybean trade relationship.

"China has historically purchased 25 to 30 million metric tons of US soybeans in recent years, and today's commitments lay a strong foundation to return to those traditional volumes over the coming marketing years," it said.

The Illinois Soybean Association said that this announcement brought some stability to the market despite the lack of confirmation from Chinese officials.

"I am excited by the US stance on working on restoring trade relations with China," the Illinois Soybean Association Vice Chairman, and At-Large Director, Brady Holst told Platts. "The announcements for soybean purchases haven't been confirmed by China yet and the amounts talked about are lower than recent years, but stable market conditions are where US agriculture thrives, so just having stability is a great sign."

SOYBEX FOB New Orleans for December shipment climbed $4.86/mt day over day to $441.93/mt on Oct. 30. The outright price for CIF NOLA for November shipment increased $4.78/mt day over day to $436.61/mt.