June 13, 2016 / 8:11 PM / 3 years ago

In rare move, Cuba buys U.S. soyoil as South American supplies tighten

CHICAGO (Reuters) - Cuba made its first U.S. soyoil purchase in more than five years this month, the latest sign that drought and heavy rains in South America have tightened supplies and disrupted longstanding trade patterns.

Buyers of soybeans and soy products have increasingly turned to the United States after rains reduced Argentina soy crop quality and stocks ran low in Brazil. Brazil is the top soybean exporter while Argentina ships the most soyoil and soymeal.

In an unusual move, the United States sold 7,600 tonnes of soyoil to the Caribbean island in the first week of June, according to U.S. Department of Agriculture data on Friday.

While the shipment comprised a small portion of U.S. exports, it was the biggest to Cuba since 2010 and the first since 2011. The companies involved were not identified. One trader noted the refined oil could be used for cooking.

Some traders said the sale could mark Cuba’s quiet return to U.S. shores for agricultural products, including rice, chicken and wheat, as relations improve between the former Cold War foes more than half a century after the United States slapped a trade embargo on its Caribbean Sea neighbor.

“Because of their location, Cuba could normally get most of their commodities cheaper from the United States. This is the opening of that door for trade to take place,” Arlan Suderman, analyst at trade house INTL FCStone, said of the soyoil sale.Cuba was the No. 1 export destination of U.S. rice before Fidel Castro overthrew the government at the end of the 1950s and the United States imposed a trade embargo in 1960.

Last month, Mike Martin, owner of the Martin Rice Company, delivered about 20 tonnes of Missouri-grown long grain rice at no cost to Cuba in a gesture of goodwill, in what would be the largest shipment of U.S. rice to Cuba since 2008.

The move came just months after President Barack Obama’s historic trip to the island in March and 1-1/2 years after the United States and Cuba agreed to restore diplomatic relations.

While the embargo remains in place and changes are unlikely until after the Nov. 8 U.S. presidential election, there is limited potential for more big sales in the short term. U.S. law prevents American companies from extending credit to Cuban buyers, even though food and medicine are exempt from the embargo.

The island mostly buys from countries offering more favorable financial terms, including rice from Vietnam and wheat from France.

Reporting by Michael Hirtzer in Chicago, editing by Josephine Mason and Richard Chang

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