Panamax futures remained buoyant this week as China continued to buy US Soybeans, despite increased political tensions over Hong Kong.
The Q4 futures rallied 5.5% on Wednesday as the world’s second largest economy was revealed as purchasing 10 cargoes of soybeans this month from the U.S. alone, according to Bloomberg. China needs beans and remains committed at this point to the phase one trade deal commitment, having purchased under USD 5 billion of the USD 36 billion they have committed to.
Does this mean the Chinese will fail to meet their commitment target? Probably. Much depends on how seriously China takes its commitment. At this point tensions are high, but the deal is still on the table. Nobody benefits from the world’s two largest economies having a tantrum.
Panamax futures are starting to tell a story, especially in the Q4. If the deal stays on the table, then China is likely to throw in the towel. It might not manage to purchase USD 31 billion before year end, but it is going to be busy, and freight rates are starting to reflect this. (FIS)