Despite an agreement in principle to purchase U.S. agricultural products and especially soybeans, prospects for increased exports are in question. A document of intent signed by China on October 23rd was essentially meaningless as it did not specify types of commodities, quantities or time periods. The “agreement” was nonbinding and in addition, China has a practice of “washing” previously placed orders depending on prevailing World prices and their domestic requirements.
Over the first six weeks of market year 2023-2024, China ‘purchased’ (placed orders) for ten million tons of U.S. soybeans representing the lowest volume since 2008, other than during 2018 and 2019 characterized by trade disputes. China has shifted purchases to Brazil based on price and availability and possibly a disinclination to obtain requirements from the U.S. as and when alternatives are available.
Prospects for exports to China have also been affected by lower feed demand as pork production has declined and nutritionists are responding to Government pressure to reduce protein levels in hog and poultry diets. Industry sources suggest that in recent weeks, China has cancelled soybean orders previously placed with Brazil.