China's state-run trading companies bought 14-16 cargoes of U.S. soybeans on Friday, four Asian traders told Reuters on Monday, taking advantage of lower prices in a flurry of purchases ahead of President Xi Jinping's expected U.S. visit next month.
The unusually large purchases total about one million metric tons, with each cargo carrying about 65,000 metric tons scheduled for shipment in October, the sources said.
"These deals were mainly done by Sinograin and the main reason is a drop in prices last week. There are plans for President Xi to visit the U.S. in September so China is also trying to buy U.S. beans under its commitment made to Washington," said one Asia-based trader at an international trading company.
The companies paid a premium of $3.03 per bushel over the November Chicago Board of Trade contract for shipment from the U.S. Gulf and a $3 premium for Pacific Northwest shipments, said one source. The most active soybean contract fell 5.2% last week.
State-run companies Sinograin and COFCO did not respond to requests for comment or confirmation of the purchases.
China's Sinograin sold about half of the 504,000 tons of imported soybeans on offer at auction on Friday as the state stockpiler makes room for incoming U.S. cargoes.
In late July, U.S. President Donald Trump said his Chinese counterpart Xi would visit the country on September 24.
Markets are waiting to see whether China will remove tariffs on U.S. soybeans, which would allow private crushers to participate in purchases.
It remains unclear, however, whether U.S. soybeans would be competitive enough to attract these price-sensitive buyers.
