The USDA (United States Department of Agriculture) announced significant new sales of soybeans and soybean meal on Thursday (18th). The sales included 510,000 tons of soybeans and 150,000 tons of soybean meal from the 2024/25 crop, both to undisclosed destinations. Market speculation suggests that China is the likely buyer.
"The market has been buzzing about U.S. soybean sales to China over the past few days," notes the team at Agrinvest Commodities, with operations spanning both Gulf and Pacific Northwest (PNW) ports. According to brokers consulted by the firm, Sinograin, the Chinese state entity managing the country's reserves, reportedly purchased ten cargoes of soybeans this week.
While Chinese demand for soybeans remains robust, it has been predominantly focused on Brazil. However, as explained by Pátria Agronegócios, China is currently facing a slight shortage in supply from Brazil. "Brazilian soybean imports might slow down not due to a lack of demand, but because of limited supply," says Matheus Pereira, director of the consultancy.
In June, Chinese soybean purchases totaled 11.11 million tons, up 10.7% year-over-year. For the first half of 2024, China, the world's largest soybean buyer, imported 48.5 million tons, an increase of 5.4% compared to the same period in 2023.
"The Chinese demand is relentless, hitting record import levels in June," Pereira adds. He further explains that Brazilian exports are unlikely to surpass last year's figures due to insufficient volume to meet the soaring demand. "If we export close to 100 million tons of soybeans in 2024, there won't be enough left for domestic vegetable oil production. We simply don't have enough soybeans to match last year's demand, which will likely drive premium prices higher."
The competitive dynamics between the Brazilian and U.S. markets will now be closely watched by Chinese buyers. According to international news agencies, China secured approximately 75 cargoes of Brazilian soybeans, roughly 4.5 million tons, in just the first two weeks of July, benefiting from favorable exchange rates.
Sources familiar with the transactions indicate that most of this volume is expected to arrive in China by August and early next year.
The volume purchased by China is typical for this time of year. However, experts are noting the tepid buying activity in the U.S., which has been a recurring theme among analysts, contributing to downward pressure on soybean prices on the CBOT.
In the first five months of 2023 alone, China's purchases of Brazilian soybeans increased by 23%.
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