Published: Thu, December 13, 2018
Markets | By Otis Pena

Chinese companies buy more than $180 million worth of United States soybeans

Chinese companies buy more than $180 million worth of United States soybeans

President Donald Trump agreed December 1 to postpone more US tariff hikes on Chinese imports for 90 days while the two sides negotiate over American complaints about Beijing's technology policy.

The purchase of over 1.5 million tonnes of beans is the most concrete evidence yet that China is making good on pledges the U.S. government said Xi made when the two leaders met on December 1 and agreed to a 90-day detente to negotiate a trade deal. A Canadian court released Meng on bail Tuesday, pending further proceedings on USA efforts to extradite her. Trump separately told Reuters that he would consider intervening in the Huawei case if it served national security and helped with a China trade deal.

But U.S. officials have been skeptical about China's willingness to back down from its global technology ambitions.

In May, after talks in Washington, the U.S. agreed to hold off on tariff threats, while China said it would reduce the import duty on foreign cars from 25% to 15%.

The soybean purchases by Chinese state-owned companies, valued at more than $500 million, will do little to reduce the $43.1 billion U.S. trade deficit with China, which Trump wants to narrow over the long term.

On Tuesday morning Beijing time, top trade officials from the U.S. and China spoke telephonically, an indication that the discussion between the two countries is ongoing, despite the tension caused by the Huawei issue.

The Wall Street Journal reported Wednesday that Chinese officials also agreed to replace the comprehensive industrial policy, Made in China 2025, which Trump officials have sharply criticized. The U.S. now charges a 27.5 percent tax on imported cars from China.

The trade war has taken a toll on auto companies that manufacture in the USA, with the makers of Mercedes-Benz and BMW both warning of lower profits this year as tariffs forced them to hike prices in China.

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Chicago Board of Trade soybean futures edged higher on Tuesday on hopes that new deals would be inked soon, but there were no signs of increased activity in the cash markets. A third trader, based in Europe, said the buyers were Sinograin and Cofco and sellers included Cargill Inc, Louis Dreyfus Company and CHS Inc.

"We expect China to resume purchases of other farm products from the United States, including corn", said Mr Li.

The companies did not immediately respond to requests for comment.

"It has been no secret that OMB has not been terribly excited about the trade aid package", one of the sources said.

Traders work on the floor of the New York Stock Exchange in New York, US, Dec. 11, 2018. "It looks like we're back in business now", the second USA trader said.

"There are a lot of farmers that sold beans out of the field and that is done", Heisdorffer said. "Any business that we can put together we're pretty grateful for". The arrest had turned out to be another hurdle to the resolution of a Sino-US trade war.

John Heisdorffer, the chairman of the American Soybean Association and a farmer in Iowa, said he feared the government was going to reduce the size of the aid payments to farmers on misplaced beliefs the trade pain was ending. The administration plans to increase these tariffs to 25 percent in January. But this year, it has relied on Argentina and top exporter Brazil for most of its soybeans used to feed the world's largest pig herd.

Trump reportedly said "If I think it's good for what will be certainly the largest trade deal ever made - which is a very important thing - what's good for national security - I would certainly intervene if I thought it was necessary".

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