USDA reports large U.S. soybean sale to China ahead of Trump-Xi meeting

CHICAGO (Reuters) - The U.S. Department of Agriculture (USDA) on Friday reported a large soybean sale to China in a surprise deal ahead of a meeting at the G20 summit between U.S. President Donald Trump and Chinese President Xi Jinping.

The USDA said Chinese importers bought 544,000 tonnes of U.S. soybeans for shipment in the 2018/19 marketing year which expires on Aug. 31.

It was the largest U.S. soybean sale to China since late March, USDA data showed.

Friday’s announcement surprised some traders as soybean export premiums for late-summer shipments were unchanged this week, showing little evidence that a large purchase was occurring, and because recent large purchases have come only after talks between the two countries.

A sharp drop in China’s hog herd, which consumes most of the soybeans processed by the world’s largest pork market, due to a deadly hog disease called African swine fever has also reduced demand for the oilseed.

“To me it looks like a good faith purchase, which we’ve seen before, although in the past they came after the two presidents shook hands. Today it’s coming before they do so it may be trying to influence talks,” said Arlan Suderman, chief commodities economist for INTL FCStone.

“All this comes against a backdrop of China having ample supplies of soybeans and talk of them delaying shipment of July beans into August because of the big supplies,” he said.

Trump and Xi are due to meet at the G20 summit in Osaka, Japan, on Saturday for the first time in seven months as the U.S.-China trade war enters its second year.

Trump said on Friday he hopes for productive talks but made no promises about a reprieve from escalating tariffs that have cast a shadow on global growth.

U.S. soybean exports to China have plunged by more than 80 percent since Beijing slapped steep tariffs on shipments last July as trade tensions between the world’s top two economies flared up.

China, the world’s top soybean importer, is on pace for its smallest U.S. soybean imports in 11 years as importers there have increased purchases from South America, mainly from top exporter Brazil.

Chicago Board of Trade soybean futures rose to session highs after the USDA announcement before paring gains as the market awaited government data on planted acres and quarterly stocks due later on Friday morning.

Source: Reuters

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