The Chinese government is in discussions with state and privately owned soybean buyers over a plan to raise purchases of US supplies, according to people familiar with the situation.
The government met with the companies on Friday in Beijing to discuss the plan, which could include waiving retaliatory tariffs on US imports, said the people, who asked not to be identified as the information is private. The government is seeking feedback from companies and the proposal is subject to change depending on progress in trade talks, the people said. Details including potential purchase volumes are yet to be finalised.
The plan adds to signs that Beijing is prepared to make a number of goodwill gestures toward Washington in order to make progress in trade talks that have yielded little since the US and Chinese leaders met in Osaka last month. In China’s eyes, the US has shown willingness by excluding some Chinese goods from punitive tariffs and discussing the possibility of allowing American companies to supply blacklisted telecoms giant Huawei Technologies, according to state media.
“China might buy some new crop soybeans to generate headlines and get negotiations going again, but there’s no reason for the purchases to be large or immediate enough to have a real impact on futures prices,” said Darin Friedrichs, a senior analyst in INTL FCStone’s Asia commodities division. “China doesn’t need US soybeans at the moment. Shipments from South America have been good and African swine fever has hurt domestic demand.”
Soybean futures were down 0.7 per cent at US$9.125 a bushel at 9.50 am in Chicago. The oilseed used to produce cooking oil and animal feed has gained about 14 per cent since mid-May when China’s near-halt of American imports and ample global supplies pushed prices to a decade-low.
President Donald Trump’s senior advisers are scheduled to discuss a resumption of sales to Huawei with US technology companies on Monday. Face-to-face talks between the countries’ top trade negotiators could happen soon, according to Chinese state media.
The plan also follows complaints by Mr Trump that China hasn’t increased its purchases of American farm products, a promise he said was secured at a meeting with Xi Jinping at the Group of 20 summit in Osaka. Mr Trump last week reiterated he could impose additional tariffs on Chinese imports if he wants.
The exemption for soybean purchases may be valid for orders made within a 30-day period, the people said. Initial estimates suggest volumes could be between 3.8 million and 6 million tons for shipments in September, one of the people said. No one replied to an email sent to the Chinese commerce ministry.
While China made goodwill purchases of American farm goods earlier this year via its state-run firms Cofco and Sinograin during a truce in the trade war, private buyers had been put off from large purchases because of the import tariffs. Before an earlier deal collapsed in May, the Asian nation agreed to “significantly” increase imports of US goods and services.