Chinese importers have been busy booking fresh purchases of soyabeans from Brazil this week, despite the White House announcement that China had agreed to buy up to $50 billion of US farm products annually during trade talks last week.
The purchases from Brazil, rather than the United States, show that Chinese buying has been driven more by price than policy since last week's preliminary trade agreement that US President Donald Trump hopes will be signed next month.
Anticipation that Chinese buyers would return to the US market to make big purchases in the wake of the deal drove benchmark US soya prices last Friday to their highest levels since the start of the trade war more than 15 months ago.
The rally in US prices last week, however, made Brazilian soya more of a bargain for Chinese buyers. Brazilian soya is even more appealing to commercial importers because a 25% duty on US shipments remains in effect and Beijing has not awarded the non-state-owned firms any new tariff waivers.
Since Monday, two traders said, China has booked at least eight boatloads, or 480,000 tonnes worth $173 million, of Brazilian soyabeans. While Brazil is China's largest soyabean supplier, large purchases from South America are unusual at this time of year with the US harvest coming in.
Benchmark US prices posted their first weekly decline in three weeks as Chinese buying failed to materialize in the US market.
Trump said on Twitter on Sunday that China has already begun making US agricultural purchases. But three US soyabean exporters said there have been no US sales to China since last week's talks in Washington, and none have been confirmed by the US Department of Agriculture.
"I've not had any inquiries at all for US (shipments)," said one of the US soyabean exporters. "There were a few November boats bought from Brazil and several new-crop South American boats for March forward but nothing here."
Another US exporter said a drop in Brazilian soyabean prices sparked fresh demand from commercial soya importers that have been unable to profitably import American soyabeans for more than a year unless given tariff waivers.
State-owned firms COFCO and Sinograin, which are exempt from the 25% retaliatory duties on US imports, have "little appetite" to buy unless US prices drop further, the second US exporter said.
White House economic adviser Larry Kudlow acknowledged on Thursday that China's "serious commitment" to buy up to $50 billion of agricultural products would depend in part on market conditions.
Before the trade war, China imported most of its US soya between October and January, turning to South America around February.
Prices for US soyabeans loaded at Gulf Coast and Pacific Northwest terminals in November and December and shipped to China are now near par with Brazilian soya prices. But when prices for soyabeans from the two top suppliers are similar, Chinese importers tend to favor Brazilian beans because of their higher average protein content.
Chinese importer Hopefull Grain & Oil bought 10 cargoes of Brazilian soya last week ahead of US-China talks and at least three cargoes this week, two of the trade sources said.
Wilmar was also a buyer, with about five to six cargoes purchased from Brazil this week, according to a US exporter and two traders, one of whom was based in Beijing while the other worked for a Chinese trading house.
Both Hopefull and Wilmar declined to comment.
The companies are believed to have used up their waivers for tariff-free US purchases in recent waves of buying, a US exporter and a Chinese importer said. Chinese importers bought about 850,500 tonnes in US soya in the week ended Oct. 10, just ahead of the phase one deal announcement, according to weekly USDA data released on Friday.
Total Chinese purchases have topped 4.5 million tonnes since early September, when Beijing began awarding tariff waivers to some commercial importers, USDA data showed.
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