China is set to buy a record amount of American soybeans this year as lower prices help the Asian nation boost purchases pledged under the phase-one trade deal, according to people familiar with the matter. Soy futures in Chicago climbed to a seven-month high. The total from the U.S. will probably reach about 40 million tons in 2020, the people said, asking not to be identified because the forecast isn’t public. That would be around 25% more than in 2017, the baseline year for the trade deal, and roughly 10% more than the record set in 2016, according to data from the U.S. Department of Agriculture.
Source: USDA sales for next season
China’s purchases of American farm goods over the first seven months of the year are at just 27% of the target value implied by the trade accord, according to Bloomberg calculations using Chinese customs data, with imports of U.S. beans in July at an unusually low level.
China’s agriculture ministry said Wednesday it expects soybean imports to rise in the second half, including from America as the phase-one deal is implemented. The U.S. usually exports the bulk of its beans toward the end of the year, just as southern hemisphere supplies run out. Brazil is China’s biggest supplier of the crop.
Moreover, private buyers won’t have much incentive to make record-breaking purchases in the fourth quarter because of the potential for a huge Brazilian crop next year, Friedrichs said.