President Trump put his weight behind an announcement that China, amid negotiations to end the trade war, committed to buy 10 million tonnes of U.S. soybeans. The decision, announced on social media by Agriculture Secretary Sonny Perdue on Friday, would more than double Chinese purchases this marketing year but still leave a huge deficit of 8.5 million tonnes in sales compared to a year ago, before relations soured.
“Show of good faith by the Chinese. Also indications of more good news to come,” said Perdue on Twitter. Chinese officials made the commitment during a meeting with Trump. The USDA later issued a news release that was a copy of the secretary’s tweet. USDA press aides were not immediately available to provide details of the timing for the purchases.
During a similar session with Trump on Jan. 31, China said it would buy 5 million tonnes of soybeans and large purchases soon followed.
A purchase of 10 million tonnes would equal 367 million bushels of soybeans, roughly 8 percent of this year’s crop of 4.544 billion bushels, and would be worth $910 million based on Chicago futures prices.
In the past, China purchased one in every three bushels of U.S. soybeans. Since the soybean marketing year opened last Sept. 1, U.S. exporters have booked 7.4 million tonnes of soybeans for shipment to China, compared to 25.9 million tonnes at this point in 2018, according to USDA data. Earlier this month, the USDA forecast soybean exports of 1.875 million bushels this marketing year, down 11 percent from 2017/18.
China repeatedly has offered to buy more U.S. food and ag exports as a way to reduce its trade surplus with the United States. Last May, Trump was optimistic of selling an additional $25 billion a year to China. At that point, China was buying around $21 billion a year of ag exports. In the latest round of negotiations, China reportedly offered to buy $30 billion a year more in agricultural goods, a target that Forbes said would be impossible to meet without worldwide disruptions in trade flows. U.S. ag exports are forecast for $141.5 billion this fiscal year, with China accounting for $9 billion of it.