Chicago | Reuters — China will probably resume buying U.S. soybeans around Jan. 1 because of limited supplies in South America, after halting purchases due to the trade war between Washington and Beijing, U.S. Agriculture Secretary Sonny Perdue said on Monday.
However, it has “yet to be determined” whether China will remove tariffs on imports of American soybeans as part of a trade truce that U.S. President Donald Trump and Chinese President Xi struck over the weekend, Perdue said.
His comments about near-term Chinese soy purchases conflict with the assessments of major U.S. trading houses which have said China may not need to buy U.S. soybeans before South America harvests its next crop in 2019.
China and the U.S. agreed in Buenos Aires on Saturday to refrain from setting additional tariffs that would escalate the months-long trade row that has roiled global markets.
The U.S. said Beijing also promised to buy an unspecified but “very substantial” amount of agricultural, energy, industrial and other products, with purchases of farm goods to start “immediately.”
Perdue said he did not have details about the size and timing of agricultural deals yet. But China will need to buy U.S. soy in the next month or so after shifting purchases to South America during the trade war, he said.
“We don’t think there’s enough soybean supply in South America to tide them over to the new crop South America,” Perdue said.
“We think they’re going to have to come back into the United States market and we’re hopeful this announcement in Argentina will facilitate that more quickly.”
His outlook differs from forecasts by top executives at Archer Daniels Midland and Bunge.
China, the world’s top soy importer, last year bought US$12 billion of the oilseed from the United States, making it the United States’ top farm export to the Asian nation.
Beijing will need to drop steep tariffs it imposed on a range of American farm products, including soy, before it can fulfill its pledge to make significant purchases, Chinese traders said.
“I’ve been talking with our negotiators and those are the issues that are going to be fleshed out here in the next few days,” Perdue said.
“There’s a lot of things we could sell them,” Perdue added, ticking off as examples U.S. rice, poultry, grain sorghum and wheat.
Despite China’s pledge, USDA is moving ahead with plans to provide a second round of financial aid to U.S. farmers hurt by trade wars, Perdue said. Details could be announced by the end of this week, he said.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.