On the same day that Beijing reportedly told state-run trading houses to pause purchases of U.S. farm exports, the companies bought a small amount of U.S. soybeans on Monday, according to unnamed sources. The saber-rattling pause was a sign that the “phase one” trade agreement was in jeopardy as Sino-U.S. relations sour.
“People familiar with the situation” told Bloomberg that Chinese government officials told state traders Cofco and Sinograin to suspend purchases; some orders for U.S. pork also were cancelled, according to one of them. By afternoon, U.S. traders told Reuters that the trading houses had purchased 180,000 tonnes of soybeans, worth $55 million, for delivery in the fall.
“It didn’t take long, with China back to buy several cargoes of U.S. soybeans today – even faster than we expected,” said Arlan Suderman, chief commodities economist for INTL FCStone, on social media. “Most soybeans bought by China are for fall delivery after Brazil beans delivered. That’s been the case for some time.”
Earlier in the day, Suderman said INTL FCStone officials expected the “pause” to be temporary. “Supplies are adequate near-term due to current shipments, giving China freedom to threaten.”
The pause followed President Trump’s decision to eliminate special treatment for Hong Kong due to Chinese curbs on democracy in the former British colony. The phase one agreement is one of Trump’s major trade achievements. However, China has moved slowly on its commitment to greatly increase its purchases of U.S. food, agricultural and seafood products this year. Rural voters were key to Trump’s election in 2016.