Chinese cancellations of U.S. soybean orders for the week ended April 26 resulted in a decline of 133,700 metric tons in net sales to China, USDA Foreign Agricultural Service data showed Thursday.
But 66,000 metric tons of those soybeans were sent to Vietnam instead, the data showed.
Meanwhile, the U.S. sold 82,700 metric tons of soybeans in new sales to Mexico, 68,800 to Taiwan, 60,000 to Argentina and 52,600 to the Netherlands. Although Argentina is the third-largest exporter of soybeans, a severe drought has reduced production by 7 million tons to 40 million, according to USDA estimates.
“That just goes to show we’re not dependent on China for soybean exports,” said Michael Stumo, head of Coalition for a Prosperous America, a nonprofit representing the interests of those in manufacturing, agriculture and labor unions.
“China buys so much soybeans they will be unable to avoid the U.S. market anyway,” Stumo said.
Soybean futures are up 9.5 percent this year following planned Chinese tariffs on the U.S. product and other goods in retaliation for the Trump administration’s proposed duties on $50 billion worth of Chinese imports. The futures rose nearly 1 percent in Thursday trading.
The lack of Chinese purchases in April also reflects a seasonal slowdown in demand.
“We are now into the season where China almost exclusively buys from Brazil,” said Ted Sefried, chief market strategist at brokerage Zaner Ag Hedge.
“We would expect China cancellations of switches of origin, unless there was a big problem with the Brazilian crop, which there is not this year,” he said.
Net sales of US soybeans to China tend to fall off in the first half of the year
Source: Thomson Reuters, US Census Bureau
In fact, U.S. soybean exports overall to China were expected to decline in the current marketing year, which ends Aug. 31, due to a historical low in U.S. soybean protein content, Allendale’s Nelson said.
The real worry, he said, is whether China reduces its demand for U.S. soybeans in the coming marketing year, which begins Sept. 1.
So far, USDA data indicates China has been increasing orders for that year, and has 1.02 million tons of U.S. soybeans on the books.
— CNBC’s Aditi Roy contributed to this report.
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