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China proposes large U.S. ag purchases

China proposes large U.S. ag purchases

U.S. farmers could see an extra US$30-billion worth of ag goods exported to China per year

By Diego Flammini
Staff Writer
Farms.com

American farmers could benefit from a Chinese proposal as part of a bilateral trade agreement.

China may offer to purchase an additional US$30-billion worth of U.S. ag products per year, Bloomberg reported. China imported US$19.6 billion of American ag products in 2017, the USDA said.

Following through on the proposal could bring U.S. ag exports to China to nearly US$50 billion annually.

The added ag purchases are part of several memorandums of understanding (MoUs) American and Chinese negotiators are working on. The MoUs include agriculture, technology transfer and intellectual property.

The publishing of a hard figure could mean a deal between China and the U.S. is possible because specific terms were never previously disclosed, said Moe Agostino, chief commodity strategist with Farms.com.

“The difference this time is that we’re hearing an amount,” he told Farms.com. “In the past, the cycle has been being close to a deal then the two countries go back to their respective trading desks. Progress is being made because we didn’t have that a month ago.”

If China and the U.S. reach an agreement, how it’s structured could affect grain markets, Agostino said.

“We need to know when it starts,” he said. “If it starts at the end of the year and it’s back-end loaded, markets are going to be very disappointed.”

The USDA is confident a deal with China will help increase grain prices.

“If we reach an agreement on structural reforms, we can recover markets very, very quickly,” U.S. ag secretary Sonny Perdue told reporters at the USDA’s outlook forum yesterday.

But, at this point, it’s “premature” to comment on what China may or may not do, he said.

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