American soybean markets experienced significant volatility this week as China resumed substantial purchases of US crops following the recent trade truce between Washington and Beijing. After reaching their highest levels since June 2024, soybean futures retreated on Wednesday amid mixed signals about China's commitment to year-end buying targets.
Major Soybean Purchases Confirmed
The United States Department of Agriculture (USDA) confirmed substantial soybean sales to China throughout the week. On Tuesday, the agency reported China purchased 792,000 metric tons of American soybeans, followed by an additional 330,000 tons confirmed on Wednesday.
These transactions come after Reuters initially reported that Chinese state-owned grain trader COFCO had bought approximately 840,000 metric tons of US soy for December and January shipment. This represents China's largest soybean purchase since at least January and the most significant deal since the late October summit between US President Donald Trump and Chinese President Xi Jinping.
Market Reaction and Price Movements
The Chicago Board of Trade witnessed dramatic price swings following the news. The most-active soybean contract reached a 17-month peak of $11.69-1/2 per bushel on Tuesday before retreating to $11.37 per bushel by Wednesday afternoon, down 16-1/2 cents.
According to market analysts at Argus, the price decline was likely driven by farmer selling and investor profit-taking after the recent rally. A Singapore-based trader commented, "We saw bullish momentum on Monday as China bought US cargoes, but the market is a bit overbought right now."
Doubts About China's Commitment
Despite the recent flurry of purchases, analysts remain skeptical about China meeting its year-end soybean buying commitments. Last month, Washington announced that China would purchase 12 million tons of US soybeans by the end of the year, but recent deals remain well below that cumulative volume.
Jim Gerlach, president of A/C Trading in Indiana, expressed the prevailing market sentiment: "This 12 million tons is probably not going to happen by the end of the year." The skepticism stems from the substantial gap between recent purchases and the announced target, even with the current buying pace.
Wheat and Corn Markets Also Weaken
The broader agricultural commodities complex also faced downward pressure. CBOT March wheat futures fell 10 cents to $5.49 per bushel after reaching a July high of $5.63-1/4 on Tuesday. Similarly, CBOT March corn dropped 8-3/4 cents to $4.40-3/4 per bushel.
While wheat markets had seen some support from hopes that China might include US supplies in its American farm goods purchases, traders noted that the fundamental outlook remains bearish due to ample global supplies. Ukraine's deputy economy minister confirmed to Reuters that the country will not restrict wheat exports in 2025/26 due to a larger harvest and slower shipments at the season's start.
The combination of these factors creates a complex landscape for agricultural traders, balancing short-term purchase announcements against longer-term supply fundamentals and uncertain trade relationship developments between the world's two largest economies.
