China on Wednesday made its first major purchases of US soybeans since US President Donald Trump and Chinese President Xi Jinping (習近平) struck a trade truce earlier this month, providing some relief to US farmers, who have struggled to find buyers for their record-large harvest.
Trump said in an interview on Tuesday that the Chinese were already buying a “tremendous amount” of US soybeans and would also soon cut tariffs on US automobiles.
The purchase of more than 1.5 million tonnes of beans is the most concrete evidence yet that China is making good on pledges the US government said Xi made when the two leaders met on Dec. 1 and agreed to a 90-day detente to negotiate a trade deal.
Global markets had whipsawed since then, with little sign that China was making the substantial purchases of US farm, energy and industrial products that Trump said would start immediately after the meeting.
Investors have been skeptical about the progress made toward ending a trade dispute that has disrupted the flow of hundreds of billions of US dollars of goods between the world’s two largest economies.
The arrest in Canada of a top Chinese executive from Huawei Technologies Co Ltd (華為) also stoked concern in markets that the trade spat could worsen.
In another sign of concessions to the US, China appears to be easing its high-tech industrial push, dubbed “Made in China 2025,” which has long irked Washington.
China has also told state oil trader China International United Petroleum & Chemical Corp (中國國際石化聯合) to buy US oil, and Washington is expecting Beijing to cut tariffs on US-made automobiles and parts.
The soybean purchases by Chinese state-owned companies, valued at more than US$500 million, would do little to reduce the US$43.1 billion US trade deficit with China, which Trump wants to narrow over the long term.
However, the purchases would provide a goodwill gesture before the next round of US-China talks to change their terms of trade.
The US has a long list of complaints against China on intellectual property, forced technology transfers and industrial subsidies.
The soybean exports would also provide relief to US farmers. Soybeans are the single most valuable US agricultural export and China bought 60 percent of those exports last year, worth US$12.25 billion.
However, China has been out of the market since Beijing imposed a tariff on US soy imports in July, pushing prices of the oilseed to decade-lows.
Benchmark soybean futures on the Chicago Board of Trade on Wednesday hit their highest level since midsummer.
Chinese state-run firms China Grain Reserves Corp (中國儲蓄糧管理總公司) and China National Cereals, Oils and Foodstuffs Corp (中糧集團) bought the soybeans, one European trader said.
The sellers included global agricultural merchants Cargill Inc, Louis Dreyfus Co and US farmer-owned agriculture firm CHS Inc.
The trader said China was seeking to buy a total of 2.5 million to 3 million tonnes of US soybeans.
Cargill and CHS declined to comment. Dreyfus did not immediately respond to requests for comment.
One US trader with direct knowledge of the deals said that Chinese state-owned firms bought at least 12 cargoes for shipment from January to March.
Another trader with direct knowledge of the deals and one who sells beans to the exporters involved said that about 30 cargoes had traded by Wednesday afternoon.
“China was buying right out of the gate this morning. It looks like we’re back in business now,” the first trader said.
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