CHICAGO (Reuters) – China’s pledge to buy American agricultural products on the basis of “market conditions” at the Phase 1 trade deal signing ceremony on Wednesday added to doubts among farmers and consumers alike. commodity traders regarding Beijing’s persistent tariffs on US exports.
The deal, intended to ease tensions after nearly two years of a tariff war on both sides, included a pledge by China to purchase at least an additional $ 12.5 billion in agricultural products in 2020 and beyond. minus $ 19.5 billion from the 2017 level of $ 24 billion in 2021.
President Donald Trump’s insistence on a significant commitment to purchase agricultural products was a major sticking point in the talks leading up to the signing, people briefed on the negotiations said as China wanted the freedom to buy. depending on demand.
Chinese Vice Premier Liu He, standing alongside Trump, said Wednesday that Chinese companies will buy American products “according to market conditions.”
As a result of the comment, the price of soybeans, the first US agricultural commodity shipped to China in value before the trade war, fell to its lowest level in a month on the Chicago Board of Trade futures market. SH0.
“Soybeans broke after that,” said Terry Reilly, senior commodity analyst at Futures International. “’When the market dictates’ means they may not come back for 36 months. Who knows? It means when they need it and the price is right.
Ted Seifried, chief strategist at Zaner Group brokerage in Chicago, said the lack of specific purchase contracts was also disappointing.
U.S. soybean suppliers will continue to face stiff competition for sales to China of a likely record Brazilian crop, which farmers will start harvesting in the coming weeks.
“I don’t see a big change happening for us because of the deal,” said Charlie Zanker, a corn and soybean farmer in Hamburg, Iowa. “It’s a global market now. “
The deal did not reduce tariffs on major U.S. agricultural exports to China, although Trump said tariffs would be removed in a Phase 2 deal. Pork is subject to a 68% tariff even as China needs more imports due to the devastating outbreak of a deadly swine disease.
“We really need the tariffs to go,” said David Herring, president of the National Pork Producers Council and pig farmer from Lillington, North Carolina, who attended the signing ceremony.
(GRAPHIC: Commitments to purchase agricultural products from the US-China Phase 1 trade agreement -)
A senior Trump administration official later said China will have to issue waivers or tariff adjustments to meet its purchasing commitments.
Chinese traders have also expressed doubts about the deal.
“I feel like China is not getting anything out of it,” a China-based agricultural commodities trader said ahead of the ceremony. “I’m just spending the money for a little peace in return.”
“OUR WORK IS NOT DONE”
China has pledged to speed up its review of agricultural biotechnology products it imports to no more than two years, according to the text of the agreement. Delays of up to seven years in China’s approval of new varieties of plants grown from genetically modified seeds have long frustrated the United States
“What we really need to see is how China is implementing this,” said Matt O’Mara, vice president of international affairs at BIO, a trading group that represents seed companies like Bayer AG. BAYGn.DE and BASF SE BASFn.DE.
Other hurdles to timely approvals remain, as China still will not start reviewing a biotech product until it is first approved by another country, O’Mara said.
“Our job is not done,” said Bill Gordon, a soybean grower from Worthington, Minnesota, and president of the American Soybean Association, who also attended the White House signing. “I think you are going to have a lot of negotiations now and steps to ease these tariffs.”
China has also made concessions to the meat industry. He agreed to remove livestock age requirements for beef shipments and relax limits on hormone use in cattle and rules requiring keeping records of animal origins, according to the text of the agreement.
The changes will make more American beef eligible for export to China, said Kent Bacus, director of international trade and market access for the National Cattlemen’s Beef Association.
“It’s a game changer,” he said. “It basically says they recognize the security of the American system.”
American grain traders Archer Daniels Midland Co ADM.N and Cargill Inc [CARG.UL] has praised the Phase 1 deal in separate statements, as has seed company Corteva Inc. CTVA.N
(GRAPHIC: US agricultural exports to China dry up in trade war png -)
Reporting by Karl Plume and Tom Polansek in Chicago; Additional reporting by Mark Weinraub and Julie Ingwersen in Chicago, PJ Huffstutter in Iowa and Hallie Gu in Beijing; Writing by Caroline Stauffer; Editing by Marguerita Choy and Leslie Adler