Trade

China Buys US Farm Goods But Cancels Previous Orders

JM Ashby
Written by JM Ashby

A private company in China has placed a new order for American soybeans for the first time since last summer when Trump launched his trade war by imposing tariffs on over $200 billion in Chinese goods, but there's no guarantee that the new order will ever be fulfilled.

The new order will not be shipped to China until October according to Reuters and Chinese buyers have also canceled some previous orders.

CHICAGO (Reuters) - The U.S. Department of Agriculture on Thursday confirmed private sales to China of 68,000 tonnes of soybeans for the 2019/20 marketing year, the first such purchase by a private buyer since the trade war between the world’s two largest economies broke out more than a year ago. [...]

In its weekly export sales report, the USDA also said China bought 66,800 tonnes of soybeans for 2018/19 delivery, including 62,000 tonnes that had previously been listed as headed for unknown destinations. But China also canceled previous purchases totaling 72,900 tonnes for the current marketing year, USDA said.

Chinese importers may very well import small amounts of American soybeans a few months from now, but it's not encouraging that Chinese buyers have canceled more orders than they've actually paid for.

In any case, 68,000 tonnes sounds like a lot but, relatively speaking, it isn't. China is expected to import 87 million tonnes of soybeans in the next fiscal year.

It may be just a coincidence or a matter of agricultural process, but it may also be shrewd politics that China is placing potential orders that may or may not be filled depending on Trump's behavior. I for one have very little confidence that Trump will be able to keep his rage tweets in his pants through October and beyond. I don't know if he can do that for even a single week.

Even if Trump does keep his pacifier in his mouth, these are not the "large scale" purchases Trump's advisers have been looking for.

Department of Agricultural Secretary Sonny Purdue put it mildly when he said China still has a "long way to go."

“As you all know, there has been a 20-million-metric-ton commitment on soybeans. I think the latest numbers I saw this week, I think we were up to 13.67 [million], if I recall directly," he told reporters Tuesday. "So they still have a ways to go, and that’s what the president is reminding them of as well."

I can find no confirmation that China actually committed to buying 20 million tonnes aside from what Purdue claims. A combination of state-owned and private firms only imported 16 million tonnes in 2018 and that was before Trump's trade war escalated to the point it's at now.

Chinese importers brought in over 32 million tonnes of American soybeans in 2017 before Trump imposed tariffs.

Chinese officials do not necessarily have to go to great lengths to make these new purchases seem more significant than they really are because Trump and his lackeys will do it for them. Trump needs everything to be great or at least sound great, and the Chinese know this. I expect we're only hours away from Larry Kudlow appearing on television somewhere to boast.

  • muselet

    Shorter Sonny Perdue: “Don’t blame us for this mess, blame China. Look over there! Shiny!”

    It seems likely China is toying with the US, at least a bit. It’s a good way to keep the Trump administration—the borderline-competent inmates, anyway—from getting comfortable.

    It could also be that China is testing the waters by placing some modest purchases, to see if the administration has calmed down.

    Neither explanation flatters the US government.

    –alopecia