The quotas apply to about 10 million tonnes of American soybeans
By Diego Flammini
A sizeable volume of U.S. soybeans will enter Chinese ports without tariffs.
China issued tariff-free quotas to processors to import U.S. soybeans. Public, private and international processors received the quotas, which apply to about 10 million tonnes (11 million tons) of soybeans, the Financial Post reported.
The quotas come about one week after Chinese and American officials met in Washington, D.C. for another round of trade talks. Following those discussions, President Trump told reporters China could buy up to US$50 billion of agricultural products annually once a trade deal is finalized.
This recent move by China should be viewed with optimism.
“The quotas work out to around 367 million bushels” of soybeans, Todd Hubbs, an agricultural economist from the University of Illinois, told Farms.com. “In a normal year without a trade war, China was importing about one billion bushels from the U.S. per year. So, this (amount) is quite a bit.”
Hubbs also categorized China’s decision as “strategic buying.”
Whenever the two countries seemed to make progress on a trade deal, China purchased U.S soybeans. But if trade talks took a different turn, they backed away, Hubbs said.
Soybean prices in general have experienced a recent upswing.
On Oct 1., November soybeans closed at US$9.19 per bushel and, as of early Tuesday afternoon, soybeans are trading around US$9.33 per bushel.
The possibility of a trade deal with China, paired with U.S. weather challenges, could bring the price up further, Hubbs said.
“I don’t think anyone has a good handle on what the winter storm in the Northern Plains did to the soybean crop,” he said. “The harvest losses could be quite high, but who knows. So, I think the strength in soybean prices is a combination of the trade deal and supply issues.”