Chinese officials met with President Trump at the White House yesterday
By Diego Flammini
China has promised to make a large U.S. ag purchase as a new round of trade negotiations between the two sides is in the works.
Yesterday, during a meeting with President Trump, Liu He, vice premier of China, announced the country would buy five million tons of American soybeans.
“That’s going to make our farmers very happy,” President Trump said during the meeting. “That’s a lot of soybeans.”
Some early reports suggested China planned to buy five million tons of U.S. soybeans daily, but a White House official confirmed the total purchase would equal five million tons, Reuters reported.
The U.S. and China are trying to work out a comprehensive trade deal before Mar. 1, which includes removing market and access barriers for agricultural and other goods to China.
“United States tariffs will increase unless the United States and China reach a satisfactory outcome” by the deadline, a White House statement said.
Commodity analysts view the soybean purchase as a positive piece of news for the ag industry.
“We’ve had about 3.482 million metric tons of beans sold to China as of through Dec. 20,” said Moe Agostino, chief commodity strategist with Farms.com Risk Management. “If you take that amount, which is down 86 per cent year-over-year, and you add the five million announced yesterday and the 5MMT announced a few weeks ago from the Beijing meeting and the total amounts to 10 or 11MMT or the equivalent of 500 million bushels.”
Soybean markets could also react in a bullish manner.
“If you assume now that the U.S. is going to do business with China and (America) wins back what it lost last April or gain more business as part of a trade deal and China starts buying fewer beans from Brazil, we could see soybean prices go back up to US$10 - $10.50 (per bushel). This is where the prices were before the trade war started.”