China pledges to buy 10MMT of US soybeans, a good sign from ongoing trade talks

USA – China has committed to buy an additional 10 million metric tons of U.S. soybeans, bringing hope to US soybean farmers who had called on the White House to resolve the trade stalemate with the Chinese.

According to Agriculture Secretary Sonny Perdue, the news is an indication of the possibility that the two world economies may reach an amicable agreement after they locked horns with tariffs in June last year.

“In Oval Office meeting today, the Chinese committed to buy an additional 10 million metric tons of U.S. soybeans,” said Perdue in a tweet.

“Strategy is working. Show of good faith by the Chinese. Also, indications of more good news to come.”

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The purchase pledge is second after the 90-day truce was declared to settle their trade disagreements.

US government data shows that China purchased 6.9 million tons of American beans, since the U.S.-China trade truce began in early December.

A Reuters report indicates that Chinese firms Cofco Corp. and Sinograin bought about 10 million tons of soybeans.

People with knowledge of the matter, known to Reuters said China is proposing that it could buy an additional US$30 billion a year of U.S. agricultural products including soybeans, corn and wheat as part of a possible trade deal.

The news come even after President Donald Trump said trade talks between the top two economies involved buying “a lot of corn,” thus farmers were expecting purchases of corn as well as ethanol and distillers dried grains.

China’s grain merchant Sinograin was reported to have agreed to contract terms for potential corn purchases.

As the two continue with negotiations, farmers are optimistic for a good market which has seen prices hit record low coupled with uncertain trading conditions.

According to Rich Feltes, head of market insights for Chicago-based R.J. O’Brien & Associates, as the market is set to re-open, prices are expected to trade higher.

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American farmers are hopeful in terms of costs and prices compared to rival Brazil, where this year’s harvest is underway.

“Our data today shows that harvest in Brazil is 43 percent complete, which means that they have a lot of soybeans headed to the port to export,” said Arlan Suderman, chief commodities economist for INTL FCStone.

“This cannot be good news for the Brazilian farmer, particularly with demand in China in decline beyond what its state-grain buyers are purchasing for its reserve.”

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