Soybean futures were flat on Thursday morning amid oversupplied conditions globally, though the market was at a two month high from China increasing agriculture shipments. Prices remain near correction territory, down 9% since President Trump signed an agreement between the US and China to increase purchases of American products, dubbed the phase one trade deal.
Tracking bulk carriers of soybean shipments, Reuters' Karen Braun discovers a "rush hour traffic of soybeans from South America to Asia continues."
Braun said, "Official export data suggests Brazil shipped close to 31 mmt in April-May. That includes 22.2 mmt to China, some 66% more than the same period a year ago."
She also shows a progression map of soybean shipments post the signing of the phase one trade deal through June 10. What it suggests is that China dramatically increased soybean shipments from South America while altogether ditching US markets.
"Here's a little 2020 progression. January 30 ➡️ Feb 26 ➡️ March 23 ➡️ April 14. Exports of soybeans from Brazil had a slower start to 2020 than 2019, but through the first five months, they have shipped 37% more than in Jan-May 2019. Jan-May shipments to China are also up 37%," Braun said.
January 30 soybean shipments
February 26 soybean shipments
March 23 soybean shipments
April 14 soybean shipments
May 11 soybean shipments
June 10 soybean shipments
At the moment, very few to no bulk carriers are carrying soybeans across the Pacific Ocean from US West Coast to Asia/China (a decline in shipments has been seen over the last several years since President Trump waged a war on trade against China -- Beijing simply went elsewhere to shop).
To be fair, China did make several purchases of soybeans from the US, as of recent. Reuters said last Tuesday that Chinese state-owned Sinograin bought at least 120,000 tons of soybeans for shipment in December.
To sum up, China, and the rest of Asia, are sourcing soybeans from South America, not the US, leaving American farmers devastated as an economic depression unfolds.
President Trump recently said he was "very torn" about whether to end the phase one deal -- as tensions between the US and China continue to soar -- it appears China refuses to buy from the US.
What's evident is that China has predictably fallen way short of its commitments of the trade deal as it now blames virus pandemic for reduced purchases.