China is proposing that it could buy an additional $30 billion a year of U.S. agricultural products including soybeans, corn and wheat as part of a possible trade deal being negotiated by the China and the United States, according to a report from Bloomberg.
The offer to buy extra farm products would be part of the memoranda of understanding (MOU) being discussed by U.S. and Chinese negotiators in Washington this week. The purchases would be on top of pre-trade war levels and continue for the period covered by the MOU.
U.S. Secretary Sonny Perdue said it was “premature” to comment on what or how much China may buy as part of a trade deal. “I don’t want to raise expectations,” Perdue told reporters attending USDA’s annual outlook conference in Washington on Thursday. “If we reach an agreement on structural reforms we can recover markets very, very quickly.”
As part of the talks, officials are also planning to discuss removing anti-dumping and anti-subsidiary tariffs on distillers dried grains, a by-product of corn ethanol production that is used in animal feed. Soybeans, corn and wheat futures climbed in Chicago in response to the news, with corn ending the day 1.3 percent higher.
China has repeatedly offered to increase purchases of agricultural and energy products to shrink the U.S. trade deficit. Since a tariff truce agreed to December, it has resumed imports of some farm goods including soybeans and President Trump said this week that “a lot of corn” would be next on Beijing’s shopping list.
In 2017, China imported a total of $24.2 billion in American agricultural products with 60 percent of that in oilseeds and the remaining in products such as meat, cotton, cereals and seafood. Combined purchases slumped by a third to about $16 billion last year as China’s retaliatory tariffs on American farm goods reduced imports.
If there is no deal between the United States and China, Brazil and Argentina would be expected to capture the market to serve Chinese demand, and the United States will sell more to Europe, the Middle East and Asian nations, USDA Chief Economist Robert Johansson said on the sidelines of the conference in Washington. “The U.S. has built up a stockpile of soybeans,” Johansson said, and it will “take a while to bring those stocks down.”
