US farm­ers cau­tious af­ter China trade deal

The Phnom Penh Post - - BUSINESS - Juli­ette Michel

US PRES­I­DENT Don­ald Trump says US farm­ers will see im­me­di­ate ben­e­fits from the trade de­tente with Beijing, but farm belt rep­re­sen­ta­tives are still cau­tious about declar­ing vic­tory.

Trump took to Twit­ter on Mon­day to de­clare that his week­end agree­ment with Xi Jin­ping for a cease-fire on new trade tar­iffs meant “Farm­ers will be a very BIG and FAST ben­e­fi­ciary of our deal with China,” with the Chi­nese to re­sume pur­chases of US agri­cul­tural goods “im­me­di­ately”.

Trump’s com­ments were fol­lowed by White House eco­nomic ad­viser Larry Kud­low, who told a press brief­ing that he ex­pects Chi­nese tar­iffs on US farm goods would be re­moved “quickly” with­out elab­o­rat­ing.

The Chi­nese tar­iffs, which have been im­posed since July, have badly bruised some seg­ments of agri­cul­ture, such as soy­beans. US soy­bean ex­ports to China since Septem­ber 1 have fallen to 339,000 tonnes from nearly 15 mil­lion tonnes year-on-year.

And even if some of those items found buyers in other mar­kets, soy ex­ports over­all dur­ing the same pe­riod were 11.9 mil­lion tonnes, down from 21.0 mil­lion year-on-year.

Still wait­ing

But the US-China agree­ment, struck on the side­lines of a G20 sum­mit in Ar­gentina, could pro­vide re­lief. Chi­nese staterun me­dia hailed the trade war truce with the US as “mo­men- tous”, while warn­ing that com­plex ne­go­ti­a­tions lay ahead.

A sur­vey of sev­eral rep­re­sen­ta­tives of the US farm belt showed a range of re­sponses, all at least some­what pos­i­tive, but none as ef­fu­sive as from the White House.

“This is the first pos­i­tive news we’ve seen af­ter months of down­turned prices and halted ship­ments,” said John Heis­dorf­fer, a soy­bean grower from Keota, Iowa.

“If this sus­pen­sion of tar­iff in­creases leads to a longer-term agree­ment, it will be ex­tremely pos­i­tive for the soy in­dus­try.”

Al­ready on Mon­day, the trade an­nounce­ment boosted soy­bean prices, with fu­tures of the com­mod­ity ris­ing 1.2 per cent in Chicago.

But with­out ad­di­tional de­tails, oth­ers in US agri­cul­ture were ret­i­cent to ap­plaud too loudly.

“We have no num­ber or time­frame ... at all,” said Amer­i­can Farm Bureau chief trade ex­pert David Sal­monsen, adding: “not un­til we see Chi­nese com­pa­nies ex­e­cut­ing con­tracts.”

He said big soy­bean con­tracts are usu­ally se­cured be­tween Oc­to­ber and March and that very few deals have been struck this fall.

“Ev­ery­thing right now is based on the good words of the two pres­i­dents,” said Iowa State Uni­ver­sity eco­nom­ics pro­fes­sor Chad Hart.

“The ex­pec­ta­tion is that there is agree­ment for sig­nif­i­cant pur­chases on the agri­cul­tural side, but it’s un­likely to be done un­til the tar­iffs are re­duced,” Hart said.

Hart said there could be some con­tracts soon from Chi­nese gov­ern­ment buyers but that most pri­vate Chi­nese com­pa­nies would await fur­ther ac­tion.

Some ob­servers noted that the two sides were still far from re­solv­ing the thorny de­tails of the broader US-China trade con­flict.

“It’s no step for­ward – if there’s any pos­i­tive from it, it’s that they’ve hit the pause but­ton on fur­ther es­ca­la­tion,” said Nati onal Far mers Union spokesman An­drew Jerome.

“From our point of view, no tar­iffs have been elim­i­nated, none of China’s bad trade poli­cies have been ad­dressed and prob­a­bly most im­por­tantly we have lost our rep­u­ta­tion as a re­li­able trad­ing part­ner and, there­fore, sta­ble mar­kets in China and else­where longterm.”

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