Trade war: China buys US soybeans after fresh round of tariff waivers, but will it be the last for some time?

The sales, reported to be between 120,000 tonnes to 400,000 tonnes, are the first since Washington announced an interim trade deal with Beijing last week

But they may also be China’s last large US purchases before newly harvested soybeans from top supplier Brazil begin hitting the market next month

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The sales, the first since Washington announced an interim trade deal with Beijing last week, may also be China’s last large US purchases before newly harvested soybeans from top supplier Brazil begin hitting the market next month, traders said. Photo: AFP

Published: 10:59am, 19 Dec 2019Updated: 10:59am, 19 Dec 2019

Chinese importers bought at least two cargoes of soybeans from the United States after receiving another round of tariff-free quota for shipments on Tuesday, traders in both countries said.

The sales, the first since Washington announced an interim trade deal with Beijing last week, may also be China’s last large US purchases before newly harvested soybeans from top supplier Brazil begin hitting the market next month, traders said.

A US trader confirmed that two cargoes, or about 120,000 tonnes, were sold on Tuesday. A second U.S trader said four cargoes were sold, and a trader in China said at least six vessels, or more than 400,000 tonnes, were booked.

Despite US assurances that China agreed to ramp up US farm product buying to record levels as part of the phase one deal, sales of soybeans, the most valuable US agricultural export, remain well below historic levels.

Chinese demand for soybeans, which are processed into animal feed and cooking oil, has eroded as half of China’s pig herd has been wiped out by African swine fever.

Market analysts and traders have questioned how Chinese purchases of US agricultural goods and related products, which peaked around US$29 billion in 2013, would hit the US target of US$40 billion to US$50 billion starting next year.

Duty-free quota was awarded for 10 to 15 vessels, or between 600,000 and 1,050,000 tonnes, said the two US traders, who asked not to be identified as they are not authorised to speak to the media.

Importers that had received waivers last month but had not used them saw those waivers cancelled without warning, they said.