US exporters cancel China soybean sales amid talk of trade tension

Private exporters announced the cancellation of close to half a million mt of soybean export volumes to China Monday, feeding into the increasingly febrile trade relations between the two countries.

However, the news failed to dent the upward momentum seen on soybean futures contracts, which received fresh impetus over the weekend on a lack of rain in Argentina.

A total of 455,000 mt of soybean exports were cancelled, according to the announcement published by the USDA, although much of the volume was offset by export sales of 314,000 mt of soybeans to unknown destinations.

"Was it expected? Probably not. Was it feared? Definitely. No one likes to see US exports cancelled, but it is more of a cancel and replace deal," one market analyst told Agricensus.

"It's still a big number for them, and people will start to read into the whole trade tension thing, no doubt," the source continued.

A trading source also saw the cancellation driven potentially by a switch in origination, rather than a further blow in Sino-US relations.

"My guess is a shipper made an optional origin sale, registered it as US origin... and will now ship it out of Brazil," the trading source said.

CME soybean futures had already gained around 13 cents/bu between Friday's close and Monday's open as weekend rains in Argentina were forceast to give way to another dry spell through the remainder of the week.

Meanwhile, soybean meal has hit a two-and-a-half year high that has further supported the soybean complex.

"Soy is in a weather market at the moment, all based on Argentina dryness and therefore led by meal... Meal prices are the leading story in beans, even with this cancellation," the analyst said.

After the cancellation announcement, the front month soybean futures contract gained further ground, rising by over 18 cents/bu on Friday's settle to smash through the $10/bu level for the first time since the end of January.

US trade relations with China have been under particular scrutiny in recent sessions, with Chinese authorities announcing an investigation into potential subsidies offered to US sorghum exporters.

China fears sorghum prices have been suppressed in order to boost demand and bolster exports.