The Department of Agriculture announced this morning export sales of 1.199 million tons of U.S. soybeans to China, the third such announcement in the past seven days after months of virtually no trade amid U.S. and Chinese trade hostilities.
A sale of 1.13 million tons was announced on Dec. 12 and then another sale of 300,000 tons was reported the next day. That’s a total of about 2.63 million tons since stalled trade negotiations resumed during a meeting between President Donald Trump and Chinese President Xi Jinping in Buenos Aires on Dec. 1.
It was during that meeting that China, according to Trump, promised to begin resuming purchases of U.S. farm commodities despite steep tariffs.
The U.S. first levied tariffs on Chinese steel and aluminum and China retaliated with tariffs on pork, dairy, fruit and other commodities. The next escalation came when the U.S. hit China with tariffs on $50 billion worth of its products to punish the country for intellectual property theft and China responded with a 25 percent tariff on U.S. soybeans, wheat, sorghum and corn.
After that came a new round of U.S. tariffs on $200 billion worth of Chinese goods. The Trump administration had planned to increase the rate on the latest tariffs from 10 to 25 percent on Dec. 1, but agreed at the Buenos Aires meeting to delay that action for 90 days will negotiations take place.
The Chinese 25 percent tariff on U.S. soybeans is still in place, but that isn’t stopping Chinese state-owned companies like Sinograin and Cofco from making large purchases.
While China’s tariff doesn’t apply to purchases for the government stockpiles, and Sinograin is in charge of those emergency supplies, Cofco owns its own crushers. There is nothing to stop China’s government from deciding to just not tax itself, says John Baize, president of John C. Baize and Associates and a consultant for the U.S. Soybean Export Council.
China, which crushes about 8 million tons of soybeans per month, “could easily take 8 or 9 million tons” of U.S. soybeans over the next couple months, Baize said.
Mark Albertson, director of strategic market development for the Illinois Soybean Association, said he was pleased about the new export sales announcement, but stressed farmers need much more.
The U.S. sold about 32 million tons of soybeans to China in 2017 and 36 million tons in 2016, according to USDA data.
“Certainly soybean farmers are eager to put this trade war behind us,” he told Agri-Pulse. “The new sales are very encouraging. We would like to see more of them, but until we actually see tariffs rescinded, we won’t be able to rest easy.”
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