China buying adds risk to soybean market

In May, US President Donald Trump announced a $17 billion agricultural deal with China that featured new commitments to purchase US farm commodities, including a target of 25 million tonnes of soybeans annually. In the months that followed, Chinese soybean purchases trickled in at a pace that fueled some skepticism about whether Beijing would meet its goal.

However, Arlan Suderman, chief commodities economist at StoneX, said contacts in China are confident the government intends to follow through on its commitment. Buying accelerated this summer, and China is expected to continue purchasing US soybeans aggressively ahead of a planned September meeting between Trump and Chinese President Xi Jinping, raising the prospect of tighter US supplies and higher prices.

“They reiterate that paying extra, even a few million extra for US soybeans, is a cheap price to pay for the concessions that President Xi is looking for from President Trump,” Suderman said. “The concessions would have a far bigger positive impact on China than what the cost to China would be to pay extra for US soybeans.”

Suderman said the current pace could put China at 50% to 60% of the 25-million-tonne target by the time Trump and Xi meet in late September.

“We had originally heard in China that the government would try to get to 15 million metric tons by Dec. 31, but they’re on a faster pace than that right now,” he said.

If Chinese buying continues, the market may need to redirect global soybean trade to accommodate the additional US demand.

“There are enough soybeans in the Western Hemisphere,” Suderman said, adding that “the main job of the market would be to reshuffle customers so that non-China customers would have to go to Brazil.”