China Buys ‘Millions Of Tons’ Of American Soybeans To Boost Trade Talks
The Chinese state agricultural conglomerate Cofco announced February 2 that it had bought “millions of tons” of soybeans from America, according to the South China Post.
Significant Chinese purchases of U.S. soybeans ceased in July after the tariff war erupted, with China imposing tariffs of 25 percent on U.S. beans in retaliation to U.S. tariffs on Chinese goods. The export price of U.S. beans began a drop from around $400 per ton in July to about $329 by early December, according to U.S. Department of Agriculture figures. In November, U.S. soy exports dropped to zero for the month, the first month of zero soy exports to China since 2008. U.S. soybean exports to China in 2018 ended at their lowest level since 2008, leaving U.S. soy growers sitting on mountains of beans that export councils were trying to market in other areas of the world.
As tariff negotiations between the U.S. and China stretch out, the Chinese side has made a few token soy buys as good-will gestures. China bought 1.5 million to 2 million metric tons of American beans in a 24-hour period in December, with shipments expected to occur sometime during the first quarter, the U.S. Soybean Export Council said, citing unidentified industry sources. On December 13, the U.S. Department of Agriculture disclosed sales of 1.13 million tons for delivery to China.
In January, the two sides agreed to a 90-day truce while trade talks continue, allowing for some Chinese purchases. On January 31, a White House official said China had agreed to buy another 5 million metric tons. If a trade agreement is not made, the next round of 25 percent U.S. tariffs targeting almost the whole range of Chinese imported goods is set to take effect in March.
China is the world’s biggest importer of soybeans and the U.S., until the tariff war, was the largest exporter, closely followed by Brazil. In 2016, U.S. soy exports to China were worth about $14 billion.
U.S. agricultural analysts warn that even if a trade deal is concluded and the tariffs removed, it may be a long time before U.S. soy growers recover their position. For one thing, China’s economic slowdown (partly a result of the tariff war) and a devastating outbreak of African swine fever among its huge swine herds has slowed its demand for feedstocks.