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In wake of coronavirus can China keep its trade deal promise to US?
- US soybean farmers have planted this season’s crop but orders from their top customer are down in favour of the beans from Brazil
- Pandemic-driven low prices combine with weak demand as Chinese livestock producers restock after African swine fever
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The economic fallout of the coronavirus pandemic may prevent the world’s largest consumer of soybeans from meeting its promise to buy US$40 billion to US$50 billion worth of agricultural products from the US.
The commitment was part of the phase one trade deal struck in January between Washington and Beijing and will largely hinge on soybeans, by far China’s largest agricultural import from the US, which are crushed into feed for livestock.
But China has been stocking up on beans from Brazil – America’s chief competitor in the soybean market – which have become far cheaper in the economic turbulence caused by the pandemic.
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China’s purchases of Brazilian soybeans hit a record 11.6 million tonnes in March, while purchases of American beans remained low, with just 12.6 million tonnes ordered so far for the entire year, according to the US Department of Agriculture.
That is slightly below the 12.9 million tonnes ordered at the same time last year, when trade tensions were high. In contrast, two years ago – before the start of the trade war – China had ordered nearly 30 million tonnes of US beans by April 2018.
American soybean farmer Dave Walton, who has just planted his latest crop at his farm in eastern Iowa, is worried his biggest customer will fail to keep its promise under the phase one trade deal.
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