BEIJING: Soybean traders in China on Friday shrugged off recent cancellations of import orders as "old business", even as the global market worried it could be a sign of Beijing backtracking on its pledge to buy more American beans.
China, the world's top soybean buyer, sharply reduced its purchases of the oilseed from the United States from mid-2018, after Beijing hit the commodity with duties of 25 percent in a tit-for-tat trade war with Washington.
But with a trade truce on Dec. 1, Beijing pledged to buy US beans again, booking about 5 million tonnes in the following weeks.
The US Department of Agriculture's (USDA) weekly export sales report on Thursday, though, showed net cancellations of US soybeans in the week ended on Jan. 3.
Chinese traders said the cancellations, however, were likely booked earlier than the deals made following the trade truce.
"It's just old business by some private crushers," said a Beijing-based trader with an international firm.
The trader, who had talked to two state-owned companies to verify they had not cancelled cargoes, declined to be identified as he is not allowed to be quoted by media.
Among the cancellations were 807,000 tonnes intended for China and 444,000 tonnes for "unknown" destinations, which the market believes could also be China.
The news appeared to contradict the recent conciliatory tone between Beijing and Washington, and went against expectations of net sales of between 600,000 to 1 million tonnes.
Chicago prices were down 1 percent on Thursday, before ticking higher on Friday.
China's most actively traded soymeal futures on the Dalian Commodity Exchange for delivery in May fell 1.19 percent to 2,581 yuan ($381.20) per tonne, as the market expected a potential Sino-US trade deal to open the way for more soybean imports.
Another trader with an international firm also believed the cancellations to be for sales booked earlier than the recent purchases pledged by Beijing.
"China would not cancel cargoes at such a key point of the ongoing trade talks. What's more, China booked more cargoes from the US later in January and February," he said.
One of the state firms has already cleared some storage in preparation for recently booked cargoes, according to another source with knowledge of the matter.
The report of the cancellations comes at a critical time in ongoing talks, with US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer wrapping up two days of trade negotiations in Beijing on Friday.
"China would only keep purchasing (US soybeans) during this sensitive period of time," said Monica Tu, an analyst with Shanghai JC Intelligence Co Ltd.
China so far this crop year has only bought about a third of the beans it purchased from the US in the previous year.
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