US soybean prices jump after Trump urges China to quadruple orders

By Ella Cao, Lewis Jackson, Chandni Shah and Tom Polansek

Aug 11 (Reuters) - U.S. soybean prices soared to a two-week high on Monday after President Donald Trump urged China to quadruple its purchases ahead of a tariff truce deadline, though analysts questioned the feasibility of any such deal.

China, the world's biggest soybean importer, has not yet pre-purchased soybeans from the upcoming U.S. harvest amid trade tensions with Washington, an unusual delay that has fuelled concerns among U.S. farmers and traders as the harvest export season approaches.

"Rapid service will be provided. Thank you President XI," Trump said in a late-night Sunday social media post.

A tariff truce between Beijing and Washington was set to expire on Tuesday, but Trump signed an executive order extending the tariff deadline by 90 days, a White House official said on Monday.

The most active soybean contract on the Chicago Board of Trade Sv1 jumped 2.4% to $10.11-1/4 a bushel.

China imported roughly 105 million metric tons of soybeans last year, with just under a quarter coming from the U.S. and most of the remainder from Brazil. Quadrupling shipments would require China to import the bulk of its soybeans from the U.S.
China imports the oilseed to crush it into soymeal for livestock feed. After record imports earlier this year, traders said a glut of soymeal in China would likely reduce Chinese demand for soybeans.
"It's highly unlikely that China would ever buy four times its usual volume of soybeans from the U.S.," said Johnny Xiang, founder of Beijing-based AgRadar Consulting.

It was unclear whether the U.S. secured any commitment by China to buy more U.S. soybeans as a condition for the truce extension, as Trump looks to reduce China's trade surplus with the U.S.

China's soymeal futures DSMcv1 fell 0.65% to 3,068 yuan per metric ton on expectations that U.S. imports could increase supply.

The United States faces fierce competition for soybean sales to China from Brazil, the world's biggest exporter. U.S. sales would suffer if China keeps a tariff on American soy, said Gary Vetter, who raises crops and cattle in Westside, Iowa.

"They're going to go to their cheapest producer," he said, referring to China.

U.S. farmers largely backed Trump in his campaigns to become president and said they appreciated his social media post, even if it does not immediately increase export sales.

"He is trying to support the United States," Vetter said.

China's Ministry of Commerce did not immediately respond to a Reuters request for comment.

SOYBEAN SHIFT

During the first Trump administration, a trade war with China hurt U.S. soybean growers as China shifted purchases toward Brazil. In the years since, China has looked to ramp up crop imports from South America and is developing a port in Chancay, Peru.

Under the Phase One trade deal that China signed to end the trade war, Beijing agreed to boost purchases of U.S. agricultural products, including soybeans. However, Beijing fell far short of meeting those targets.

"They certainly don’t have the room to buy multiples of U.S. bean imports," financial firm Marex said.

China started importing U.S. soybeans in 1995, and the country typically begins booking post-harvest purchases much earlier in the year. This year is the longest that China has avoided booking soybeans from the autumn harvest since at least 2005, according to U.S. Department of Agriculture data and interviews with exporters.

"On Beijing's side, there have been quite a few signals that China is prepared to forego U.S. soybeans altogether this year," said Even Rogers Pay, an agricultural analyst at Trivium China.

Reuters previously reported that Chinese feedmakers have purchased three Argentine soymeal cargoes as they aim to secure cheaper South American supplies.

The U.S. soybean industry has been seeking alternative buyers, but no country matches China's scale. Last year, China imported 22.13 million tons of soybeans from the U.S., and 74.65 million tons from Brazil, according to Chinese data.

"We're all working to diversify away from China, but China is critically important for us," said Jim Sutter, CEO of the U.S. Soybean Export Council. "So we've been encouraging the U.S. government to work with China to try and get another agreement in place."