Chinese crushers snap up US soybeans after quota exemption meeting

Chinese private and state-owned crushers bought between 800,000 and 1.5 million mt of US soybeans on Monday, market sources told Agricensus, after a meeting in which the Chinese government said it would exempt about 1.5-1.6 million mt of imports from a 30% import tariff.

According to several market sources, purchasing managers at least six crushers met with officials from China’s commerce ministry on Monday, in which it was agreed to exempt the tariff for Q4 shipments.

“I heard several people who are in charge of [US soybean] quotas at private crushers were summoned to Beijing for meetings," said one market participant who declined to be named.

"Yes, I heard that as well. They were summoned separately. Heard it was about a quota," a second source said.

Market rumours suggest another 800,000-1.5 million mt was contracted - equivalent to 10-15 cargoes, with prices around 140 c/bu over November futures for November shipment.

Cargoes were also purchased for October and December loading.

Companies that were said to have received a quota include Cofco, Jiusan, Wilmar and Sinograin.

This week's purchases come on top of about 1 million mt of US soybeans that crushers have made in the past fornight, with rumours suggesting a total of 5 million mt may be exempt from the tax, providing they are bought for shipment in the next five months and contracted in the next month.

The so-called “good-will” exemptions come as Chinese and US officials re-engaged in trade talks last week in a bid to resolve a trade dispute that has seen more than $500 billion worth of goods hit with import taxes.

The latest round of negotiations finished last Friday amid pessimism that little had been achieved after Chinese officials cancelled a field trip to see US crops.

Soybean futures on CME rallied 1.5% on the rumours to hit a six-day high of $8.99/bu.

US soybeans are offered on a delivered basis ex-PNW for delivery into North China at around 141 c/bu over November futures for October shipment CFR China.

That equates to around 64 c/bu ($23.5/mt) cheaper than Brazilian soybeans.