China could buy 3.8-6m t of soybeans in the US, says international media

A new match between China and the US chess seems to be intensifying in recent days and the market is now speculating that the Asian nation may already be considering new soy purchases in the US market. According to information from the international news agency Bloomberg, Chinese government officials would be in talks with state-owned companies and private companies to outline a possible plan to expand their purchases of US oilseed.

Initial information is that volumes considered would be between 3.8 and 6 million tonnes for shipments in September. China's Ministry of Commerce has not yet officially positioned itself on the issue.

Sources familiar with the matter note that among the issues discussed at meetings since last Friday (19) - which have led to speculation in Chicago and rises of more than 20 points among commodity futures on the Chicago Stock Exchange - includes the possibility of suspending China's tariff on US soybean that is now 25%.

So what Beijing now expects is a feed back from buying companies to effect another sign of "goodwill" with the Donald Trump government amid a trade dispute that has dragged on for more than a year and with the aim of moving forward with trade negotiations with the Americans. Since Trump and Xi Jinping met at the last summit of the G20 in late June in Japan, the talks have evolved little or almost nothing.

At the center of the disagreements are mainly issues related to technology issues and the role of Chinese telecommunications giant Huawei. And last week, the Chinese government denied the US president's statement about an agreement that would have been signed at the G20 for the Asian nation to expand its purchases of agricultural products in the United States.


A US delegation led by Trade Representative Robert Lighthizer and US Treasury Secretary Steve Mnuchin are expected to travel to China next week and hold the first personal meeting between leaders of the two nations since the Xi and Trump G20 meeting . Vice Premier Liu He, the president's right-hand man when it comes to economy, is expected to lead the Asian nation's team.

According to China's South China Morning Post, the meeting was rooted after the US signaled the possibility of exempting 110 Chinese products from import tariffs, including medical equipment and key electronic components in production, according to a source who chose not to to identify. Similarly, and with a gesture of goodwill, Beijing would have flagged these purchases of more American agricultural products.
The meeting, if it happens, is considered by experts as one more step in the negotiations between the two largest economies in the world. Still, they also believe that the conflict can still take considerable time and that the road to effective settlement is rather long. The meeting has not yet been officially confirmed by either side, although telephone conversations between representatives of the two countries were held last week.

China EUA
image: IC

"No matter how much uncertainty is ahead of us, China will continue in its own way, do whatever it sees fit and strengthen its ability to deal with risks and challenges," the Xinhua news agency's editorial said.


In Brazil, the market is also attentive to the impacts of these speculations and new movements on the formation of soybean prices. At first, an agreement between China and the US would put considerable pressure on prices here and would also result in less dependency on the Chinese in South America, as Cerealpar and Culte consultant Steve Cachia explains.

However, this year is different and there are other factors that create another scenario. "Our supply is limited by the downturn, and if China has nowhere to buy, it would have to force prices upwards to secure product, and that would give us support in the off-season.

Now, if you have a US option - and the supply is big there big, with ample stocks and if we do not have major losses in the American crop - the limit of high potential in Chicago would be limited, "he says.

In addition, with confirmed Chinese purchases in the US, there would still be pressure on Brazilian premiums. More than that, international freights at the highest levels in five years, according to the consultant, are another point of attention.

"The evolution of the talks is not impressing me and the time is passing, but I do not doubt if political issues end up having even more weight (from what we have seen now.) So far China has, in one way or another, soybean market without further scares, perhaps aided by weaker demand for African Swine Fever, "Cachia explains. "I think they're going to play hard." In addition to the desire to get it right, of course, this trade war novel is starting to look like a tough game of geopolitics, too, and the US 2020 elections are getting closer. "

Posting: Marina Carvejani
Author: Carla Mendes
Source: Noticias Agrícolas