China issues first batch of US soybean quota after 'phase-one' deal

The Chinese government has granted a new round of tariff-free quota for crushers to buy US soybeans, just days after stating the two countries have reached consensus on a “phase-one” trade deal.

Market sources told Agricensus Tuesday, that China’s National Development and Reform Committee issued fresh quotas worth about 1 million mt to several crushers.

“It was rumoured during the day, but some guys got them tonight,” one soybean trader from a major crusher told Agricensus.

The information was confirmed by seven other China-based trade sources.

“The total volume is identical to the last round,” a second trade source said.

Louis Dreyfus, Cargill, Wilmar, Xiangchi and Bohi were said to be among the group of international and private crushers that received the quota, in a move that will likely prompt purchases of US beans for January shipment.

State crushers such as Cofco, Sinograin and Jiusan were said to not have received any this time.

However, traders are sceptical about whether the quota will be fully used given limited Chinese demand.

"I expect not many [crushers] will use... US can't compete with Brazil. US beans already have no chance for February [shipment]," a second soybean trader at an international trading house said.

"We might not be able to execute, so not sure about others," a third trader from a seperate international crusher said.

China issued tariff-free quota of up to 20 cargoes last week, with which crushers snapped up 12-13 cargoes of US soybeans for January shipment.

This is the first round of quotas after China and the US made substantial progress on trade talks last week.

China has been issuing tariff-free quota to crushers since November last year to smoothen trade talks with the US and help raise demand.