CHICAGO (Reuters) – China’s promise to buy agricultural products from the US UU. Depending on the “market conditions” during the signing ceremony of the Phase 1 trade agreement on Wednesday, doubts were raised between farmers and commodity traders about Beijing’s persistent tariffs on US exports.
FILE PHOTO: A bundle of soybeans is shown at the Monsanto research facility in Creve Coeur, Missouri, USA. UU., July 28, 2014. REUTERS / Tom Gannam / File Photo
The agreement, aimed at reducing tensions after almost two years of tariff warfare, included a commitment from China to buy at least an additional $ 12.5 billion in agricultural products in 2020 and at least $ 19.5 billion above the 2017 level. $ 24 billion in 2021.
President Donald Trump’s insistence on a great commitment to buy agricultural products was an important point of conflict in the pre-signing talks, people informed about the negotiations said, since China wanted the freedom to buy based on demand.
Chinese Deputy Prime Minister Liu He, along with Trump, said Wednesday that Chinese companies will buy US products “according to market conditions.”
After the comment, the price of soybeans, the main agricultural product of the USA. UU. Sent to China by value before the trade war, it fell to a minimum of one month in the SH0 futures market of the Chicago Board of Commerce.
“The soybean broke after that,” said Terry Reilly, senior commodities analyst at Futures International. “‘ When the market dictates “means that they cannot return for 36 months. Who knows? It means when they need it and the price is right. ”
Ted Seifried, chief strategist at the Zaner Group brokerage in Chicago, said the lack of specific purchase contracts was also disappointing.
US soybean suppliers UU. They will continue to face stiff competition for sales to China of a likely record Brazilian harvest, which farmers will begin to harvest in the coming weeks.
“I don’t see a big change for us because of the agreement,” said Charlie Zanker, a corn and soybean farmer in Hamburg, Iowa. “It’s a world market now.”
The agreement did not reduce tariffs on major US agricultural exports to China, although Trump said the tariffs would be reduced in a Phase 2 agreement. The pig is subject to a 68% tariff, even when China needs more imports due to the devastating outbreak of a deadly swine disease.
“We really need the tariffs to disappear,” said David Herring, president of the National Pork Producers Council and a pig farmer in Lillington, North Carolina, who attended the signing ceremony.
A senior Trump administration official said later that China will need to issue exemptions or rate adjustments to meet its purchase commitments.
Chinese merchants also expressed doubts about the agreement.
“I feel that China is not getting anything out of that,” said a China-based crop merchant before the ceremony. “Simply spend some money in exchange for peace.”
“OUR WORK IS NOT DONE”
China promised to accelerate its review of agricultural biotechnology products that 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 crop varieties from genetically modified seeds have long frustrated the US. UU.
“What we really need to see is how China implements this,” said Matt O’Mara, vice president of international affairs for BIO, a commercial group that represents seed companies like Bayer AG (BAYGn.DE) and BASF SE (BASFn.DE)
There are other obstacles to timely approvals, as China will not begin to review a biotech product until another country approves it for the first time, O’Mara said.
“Our work is not over,” said Bill Gordon, a soybean farmer from Worthington, Minnesota, and president of the American Soybean Association, who also attended the White House signing. “I think they will now have many negotiations and measures to alleviate those tariffs.”
China also made concessions to the meat industry. It agreed to eliminate the age requirements of cattle for meat shipments, and will alleviate the limits on the use of hormones in cattle and the rules that require the maintenance of records on the origins of animals, according to the text of the agreement.
The changes will make more US beef eligible for export to China, said Kent Bacus, director of international trade and market access for the National Livestock Association.
“It’s a game changer,” he said. “It basically says they recognize the security of the American system.”
American grain merchants Archer Daniels Midland Co (ADM.N) and Cargill Inc [CARG.UL] he praised the Phase 1 agreement in separate statements just like the Corteva Inc seed company (CTVA.N)
Reports by Karl Plume and Tom Polansek in Chicago; Additional reports by Mark Weinraub and Julie Ingwersen in Chicago, P.J. Huffstutter in Iowa and Hallie Gu in Beijing; Written by Caroline Stauffer; Edition of Marguerita Choy and Leslie Adler