China purchases US soybean after trade war truce between Trump and Xi

USA – China has purchased 300,000 metric tons of U.S. soybeans, the first major purchase made since the two world’s economic giants declared trade war in July this year.

Based on the USDA estimates, the export sales of soybeans were delivered to China while 130,000 metric tons of soybeans were delivered to unknown destinations during the 2018/2019 marketing year.

The report showed that the purchase was the ninth-largest daily sale in the history of USDA’s record keeping.

This comes after a truce was reached between China President Xi Jinping and U.S.President Donald Trump to reduce the impact of trade war on the economy of the countries.

The two agreed to drop some of the tariffs initially imposed on essential goods with a 90-days ultimatum to find a lasting solution to the problems.

China agreed to buy a substantial, amount of agricultural, energy and other product from the United States while the White House to hold off on raising the tariff rate on US$200 billion of Chinese imports.

The countries declared a trade war in July when President Trump imposed duties on Chinese goods to pressure Beijing to change its trade and intellectual property rights practices.

In total, China reportedly purchased about 1.5 million tonnes of soybeans valued at US$500 million in one week, reportedly bought by Chinese state-run firms Sinograin and Cofco.

The sellers included global agricultural merchants Cargill Inc, Louis Dreyfus Company and U.S. farmer-owned agriculture company CHS Inc.

The trader said China was seeking to buy a total of 2.5 million to 3 million tonnes of U.S. soybeans.

This sounds like a relief to US farmers who for a long time have relied on China to purchase most of its soybeans, given that the Asian country is by far the largest market for the commodity.

In 2017, 60% of U.S. soybean exports went to China and were worth more than US$12 billion, while other markets include Brazil.

The steps aim at easing trade talks between Trump and his Chinese counterpart Xi,who has eased his stance on “Made in China 2025” and has told state oil trader Unipec to buy U.S. oil.

U.S. farmers stored soybeans after the fall harvest, instead of selling them to grain traders and processors, because of low prices and lack of alternative buyers.

The White House had delayed additional payments from a US$12 billion aid package for farmers, with optimism that China will resume buying the US soybeans.

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