Global soybean demand has been robust recently, with new American crop sales at record levels, said Jim Sutter, CEO of the U.S. Soybean Export Council.
On Tuesday, prices of U.S. soybean futures rose to their highest levels since 2018 after the U.S. Department of Agriculture said that Chinese buyers purchased 664,000 tonnes, the largest daily total since July 22.
“It looks like the outlook demand for the next six months or so is pretty good, and so I would say U.S. farmers are feeling much more optimistic than they said, a year or even six months ago,” Sutter told CNBC’s “Street Signs Asia” on Thursday.
He argued that China snapping up U.S. soybeans indicates that phase one trade deal between the two countries is successful.
According to the agreement signed in January, China is committed to buying $12.5 billion of American agricultural goods in 2020 and another $19.5 billion in 2021. China is the world’s largest importer of soybeans, importing 60% of the world’s soybean exports.
While there are concerns that China may not be able to fulfill its commitments in the phase one deal, he explained that is largely due to the perception that purchases would take off immediately after the deal was done.
However, there were issues and details to be worked through and China is now actively buying soybeans at this time of the year on seasonal demand, said Sutter.
And the country’s soybean demand is likely to grow as the country’s hog herd numbers recover from an African swine fever outbreak, he said.
“Now, as we get into the time of the year when China is more typically purchasing soybeans from the northern hemisphere — the United States in particular — we are seeing them make significant purchases … we have a record amount of new crop sales open to China at this time, so we are thinking that it is a successful trade deal,” Sutter added.
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