By Bloomberg News
China is considering buying some U.S. agricultural products as a gesture of goodwill amid the resumption of trade talks between Beijing and Washington, though the volume is likely to be smaller than before, according to people familiar with the situation.
Purchases could include soybeans, corn and pork, according to the people, who asked not to be identified as they’re not authorized to speak to the media. Total volume will depend on the progress of trade talks, though it will probably be smaller than the amount China committed to buy during the previous truce, they said.
Presidents Donald Trump and Xi Jinping struck a truce at the weekend on the sidelines of the Group of 20 summit in Osaka, Japan. While the potential purchases may provide some comfort to America’s farmers, the overall cautious tone suggests China is unwilling to promise too much without a deal. The plan hasn’t been discussed with their American counterparts, and isn’t a part of the current truce agreement, the people said.
During the last detente in December, China committed to buying over 20 million tons of U.S. soy, pork and corn. After talks fell apart in May, China said it would continue with the purchases, though it did ask for some shipments to be delayed.
Some Chinese buyers were asking for offers of U.S. soybeans to be shipped out of the Pacific Northwest, said Dan Basse, president of Chicago-based consultant AgResource Co. “No sales that I have heard,” he said in an email.
Chicago hog futures gained about 1% at the open on Wednesday, buoyed by hopes of U.S. pork buying by China. “It’s that headline that’s popped us early,” said Craig VanDyke, a risk management consultant at Top Third Ag Marketing.
Soybean futures, generally the most sensitive agriculture commodity to news out of China, climbed 0.8%, trailing gains in corn futures.
An influential Chinese agricultural researcher this week said Beijing is unlikely to start purchasing large amounts of U.S. products anytime soon. Barriers include tit-for-tat tariffs that remain in place, as well as tension over Huawei Technologies Co., said Li Qiang, chairman and chief analyst at Shanghai JC Intelligence Co.
Buying more U.S. agriculture goods also likely will not change Washington’s strict demands for concessions from China on intellectual property. “I’m not sure there’s any point for China to buy more than is needed,” Darin Friedrichs, senior Asia commodity analyst at INTL FCStone, said in an emailed report.
Trump said after the G-20 meeting that he would hold off indefinitely on tariffs planned for an additional $300 billion in Chinese imports while allowing U.S. companies to continue to do some business with Huawei, one of the country’s most prominent firms. Still, the White House has yet to reveal details of Trump’s arrangement with Xi, leaving uncertainty about how the two countries will proceed.