China, instead of selling immediately as a feed ingredient, is stockpiling up to 7 million tons of soybeans purchased from the United States during an earlier ceasefire in a trade war, Reuters reported.
Beijing’s unusual move to store such large volumes of oilseeds from the United States was due to signs of a protracted trade conflict with its second-largest supplier of goods after a sharp escalation of tension between the two countries last month.
China typically buys about two-thirds of soybeans sold around the world to help feed its huge livestock population, although it is taking certain steps to reduce soybean purchases, such as switching to alternative feeds and lowering their protein levels. .
Since December last year, as part of a truce between the two world economies, China has purchased about 14 million tons of soybeans from the United States. More than 6 million tons have already been shipped to China, and most of them are processed into soy flour containing oil and feed ingredients.
However, the remaining beans booked by state-owned companies COFCO and Sinograin, but not yet sent, will be redirected to government reserves.
“Any volumes of beans that are now coming from the United States are stored because they are preparing for a protracted trade war,” said a Singapore-based trader from an international trading company who had information on this issue, but refused to identify himself because he was not authorized to speak with the media.
Chinese organizations declined to comment on this issue. China, the world's largest buyer of soybeans, has already drastically reduced imports from the United States after imposing a 25% duty on such goods last July.
To compensate for the drop in US imports, China has stepped up purchases in Brazil and other countries.
