China Plans to Stockpile 7 MMT of U.S. Soybeans, But Shipping Those Beans Could Be a Challenge

Posted on 06/04/2019 12:25 PM

China will stockpile up to 7 MMT of soybeans it purchased from the U.S. during a truce in the trade war earlier this year rather than crushing them for immediate sale as a feed ingredient, according to two traders cited by Reuters. China bought 14 MMT of U.S. soybeans earlier this year, 6 MMT of which have already been shipped.

While it’s encouraging that China does plan on taking the beans, despite a revival of trade tensions between the two countries, its plans to put the beans in storage signal the country is preparing for a drawn-out trade battle.

But getting those 7 MMT of soybeans to China could be an issue, as this represents an unprecedented backlog of beans to be shipped this summer. Plus, widespread flooding in the Midwest makes getting the beans to the Gulf a challenge.

Another option is that Chinese importers and U.S. exporters could try to renegotiate contracts for delivery this fall when fresh supplies come available. And U.S. exporters dealing with flooding could seek force majeure declarations.

Pushing back commitments would mean that USDA’s old-crop export projection is too high.

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