China is likely to continue purchasing soybeans from the United States to help cover a shortage later this year, Bloomberg reported, citing a Chinese agricultural consultant.
Crushing plants will need more soybeans as feed demand is expected to grow with a recovery in hog breeding, said Shanghai JC Intelligence Co.
Tensions between the United States and China have escalated recently over a range of issues from the origin of the coronavirus to Hong Kong. In response, the Chinese government ordered state-run importers to stop purchases of some US farm products, according to sources.
Commercial purchases are exempt from the halt, and crushers will need more soybeans for the fourth quarter and the first two months of next year, usually a peak time for US sales, Bloomberg said.
Shrinking supplies in Brazil have increased premiums, said Monica Tu, an analyst with Shanghai JC Intelligence.
“Crushers will need to buy at least 20 million tonnes to cover their needs until then, regardless of purchases by state reserves,” Tu said.
Prior to the state-owned purchase halt, the companies had been increasing purchases from the United States to meet commitments under the phase one agreement, which calls for purchases totaling $36.5 billion.