CHICAGO, Dec 22 (Reuters): China's Sinograin has bought nearly 500,000 metric tons of US soybeans this week for shipment in March and April, paying more for US supplies for state reserves rather than buying cheaper Brazilian beans, two US traders familiar with the deals said.
China is the world's top soy buyer and a crucial market for both U.S. and Brazilian farmers, who supply the bulk of China's imports.
The industry is monitoring sales and trade flows to China closely ahead of President-elect Donald Trump's inauguration on Jan. 20, on concern that another round of tit-for-tat tariffs would erode the value of US soybeans.
Soy prices hit four-year lows this week on trade tensions and amid high US stockpiles and a looming record harvest in Brazil.
Sinograin's purchases this week follow deals China booked last week for around 750,000 tons for shipment from January to March. Those are modest volumes for Sinograin, China's state-run grains trader and strategic reserves manager, which typically buys millions of tons at a time, the traders said.
Sinograin prefers US beans when it is buying for storage because they are less prone to spoilage than those from Brazil, traders said.
Sinograin did not immediately respond to a request for comment on Thursday.
That would explain Sinograin paying more for U.S. beans, rather than buying cheaper Brazilian beans that will be abundant during the March-April delivery period, according to market analysts.
Sinograin bought at around 90 cents a bushel over Chicago Board of Trade March futures and 80 cents over May futures on a free-on-board (FOB) basis, according to one trader, around 80 cents to $1 above Brazilian FOB prices for that period.
The purchases come as overall Chinese agricultural imports have slowed. They also come as Brazil, China's top soy supplier, is preparing to harvest a record crop.
