China set to buy US soya as trade fears ease
China’s state grain stockpiler returned this week to the US soyabean market for the first time since early April, a sign Beijing is preparing to resume purchases as tension between the world’s top two economies eases, two sources said.
The renewed interest in the oilseed, used in animal feed, follows Beijing’s pledge at the weekend to buy more US goods from its top trading partner, including agricultural products.
China made the pledge to avert a trade war that could damage the global economy.
As the two sides stepped back from a full-blown trade war, Washington also neared a deal on Tuesday to lift its ban on US firms supplying Chinese telecoms equipment maker ZTE, and Beijing announced tariff cuts on car imports.
State grains buyer Sinograin asked about US-origin soyabean prices this week after being largely absent for the past six weeks, two sources with knowledge of the matter said.
“Sinograin is in the market today asking US suppliers to make offers for shipment of old crop as well as new crop beans for shipment August onwards,” said a source who works at a private soyabean crushing company in China.
Sinograin’s requests for prices were interpreted as a sign that government curbs on buying US goods had been lifted.
“It is a clear message to even private companies that it is okay now to import US beans,” the source said.
Soyabeans are the US’s top agricultural export to China, worth $12bn in 2017.
Two other sources briefed on the matter said state grain trader Cofco was also now permitted to buy US soyabeans, with the restrictions put in place during high trade tensions removed.
It is not clear how or when the government communicated this, and Sinograin, Cofco and the ministry of agriculture and rural affairs did not respond to requests for comment. A ministry of commerce spokesman said the ministry has not told state companies to increase US soyabean purchases.
Traders also reported a pickup this week in inquiries for other grains as improving trade relations rekindled the broader US-China grain trade.
The news will come as a big relief to US farmers, who saw orders cancelled and business with China dry up as Washington and Beijing lobbed trade tariff threats at one another.
The global commodities market and trade flow of goods from sorghum and maize to pork have been roiled by the dispute. Beijing warned in April it would hit US imports of soyabeans and agricultural products with an additional 25% duty, after the US threatened to apply a similar tariff to 1,300 Chinese products.