Chinese importers bought at least two cargoes of U.S. soybeans after receiving another round of tariff-free quota for U.S. shipments on Tuesday, traders in both countries said.
The sales, the first since Washington announced an interim trade deal with Beijing last week, may also be China's last large U.S. purchases before newly harvested soybeans from top supplier Brazil begin hitting the market next month, traders said.
A U.S. trader confirmed that two cargoes, or about 120,000 tonnes, were sold on Tuesday. A second U.S. trader said four cargoes were sold, and a trader in China said at least six vessels, or more than 400,000 tonnes, were booked.
Despite U.S. assurances that China agreed to ramp up U.S. farm product buying to record levels as part of the "phase one" deal, sales of soybeans, the most valuable U.S. agricultural export, remain well below historic levels.
Chinese demand for soybeans, which are processed into animal feed and cooking oil, has eroded as half of China's hog herd has been wiped out by African swine fever.
Market analysts and traders have questioned how Chinese purchases of U.S. agricultural goods and related products, which peaked around $29 billion in 2013, would hit the U.S. target of $40 billion to $50 billion starting next year.
Duty-free quota was awarded for 10 to 15 vessels, or between 600,000 and 1,050,000 tonnes, said the two U.S. traders, who asked not to be identified as they are not authorized to speak to the media.
Importers that had received waivers last month but had not used them saw those waivers canceled without warning, they said.
China will issue more of such quotas and more frequently, now that an initial deal was reached, said two other trade sources familiar with Beijing's plan.
Chinese crushers would need about 1 million tonnes of U.S. soybeans before new-crop Brazilian beans are available, traders estimated.
"I don't think there will be much more buying after this, as the market here does not need many U.S. soybeans now," said one trader with a Chinese importer that has booked Brazilian beans beyond mid-2020.
Soy crushing margins have thinned since last week's trade deal news, the trader said.
U.S. soybeans are competitively priced through mid-January while Brazilian shipments are competitive beyond that, according to a U.S. soybean export trader. A second U.S. trader said Brazilian soy prices only begin undercutting U.S. prices from February onward.
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