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A flurry of U.S. soybean purchases by European buyers occurred as tensions between the United States and China have increased.

The purchases imply one of the first signs that trade tariff threats lobbed between the world’s top two economies are disrupting global commodity trade flows.

Confirmed by the U.S. Department of Agriculture last Friday, the sales helped underpin the benchmark Chicago Board of Trade soybean prices after U.S. President Donald Trump threatened to slap tariffs on an additional $100 billion of Chinese goods.

Trade Flows

According to the USDA, 458,000 tonnes of U.S. soybeans were sold to undisclosed destinations, which traders and grains analysts said included EU soybean processors such as the Netherlands and Germany.

With that, it would be the largest one-off sale to the bloc in more than 15 years if the entire volume goes to the European Union, according to USDA data.

Traders and analysts said the unusual trade flows were likely to continue in the near term, benefiting U.S. Gulf Coast shippers and likely hurting exporters in the U.S. Pacific Northwest, the No.2 bulk grain outlet that relies heavily on Chinese demand.

Soybean Sales

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The United States is the second-largest soybean exporter in the world after Brazil. China is by far the top buyer, importing about two-thirds of all soybeans traded globally.

The big U.S. soybean sales come at a time when U.S. shipments are traditionally costlier than newly harvested soybeans shipped from Brazil, the world's biggest exporter.

But accelerated buying of Brazilian beans by Chinese importers, weary of potentially paying steep tariffs on U.S. purchases, has sent Brazilian export premiums to historic highs.

Some of the sales announced by USDA on Friday were initially booked as Brazilian shipments, but were switched to cheaper U.S. beans when Brazil's prices spiked, traders said.

"U.S. prices got exceedingly cheap compared to Brazil," said a U.S. trader who asked not to be named. "Some of this is outright new business. Some of it is arbitraging away from Brazil."

The current-season shipments are slated for loading from May to July, they said, typically the height of Brazil's export season and a low point for U.S. shipments.

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