While the U.S. and China have reached a deal for China to buy U.S. agricultural goods, the market is waiting for China to drop tariffs before transactions take place. Reuters reports no substantial purchases can happen with a 25 percent duty still in place on U.S. soybeans, corn, sorghum and wheat, according to buyers and analysts. China over the weekend agreed to a trade war ceasefire, and the White House said China had promised to buy an unspecified but “very substantial” amount of agricultural, energy, industrial and other products, with purchases of farm goods to start “immediately.”
Agriculture Secretary Sonny Perdue says the purchases will likely start next month. China’s foreign ministry said on Monday that the two presidents had instructed their economic teams to work towards removing all tariffs.
The South China Morning Post reports a deal between the U.S. and China could turn Brazil’s expected bumper crop of soybeans into a glut. Brazil is nearing harvest time of the crop as it was thought to be the primary supplier of soybeans to China due to the U.S.-China trade war. But, with China and the U.S. halting further tariffs and working through a 90-day period to strike a deal, along with China’s promise to buy more U.S. ag products, Brazil farmers seem likely to lose the China demand.
China imported 6.92 million metric tons of soybeans in October, of which 6.53 million, or 94 percent, from Brazil – almost double the 3.38 million metric tons imported from Brazil a year earlier. China has depleted Brazil’s market regardless over the last few months, meaning China would have to eventually turn back to the U.S. for soybeans.
Source: NAFB News Service