China reportedly bought $180 million worth of US soybeans, and it's the first concrete sign of a truce between Trump and Xi
- China reportedly bought more than 500,000 tons of US soybeans, worth around $180 million.
- China promised to purchase US soybeans as part of the preliminary deal forged by President Donald Trump and Chinese President Xi Jinping.
- China is the largest market for US soybeans, making up over 60% of total exports in 2017.
- China's tariffs on US soybeans had caused exports to dive and wrecked many American farmers.
Chinese state-owned firms made a huge order of soybeans on Wednesday, according to a new report, the first concrete sign that Beijing is following through on promises made as part of the trade war truce.
Reuters, citing two US commodity traders, reported that state-owned firms bought more than 500,000 tons of soybeans worth roughly $180 million on Wednesday. Chinese purchases of soybeans had collapsed by more than 90% since President Donald Trump's tariffs caused Beijing to respond with tariffs of their own on US crops.
China was the largest market for US soybeans in 2017, accounting for around $14 billion in sales - more than 60% of total soybean exports. Soybean exports to China accounted for around 10% of the total value of all US agricultural exports last year.
But tariffs on US soybeans and ongoing trade war caused the amount of soybeans heading to China to drop to nearly zero, despite October and November typically representing the peak season.
The lack of sales has left US farmers in a rough spot. Prices plunged due to oversupply, and a large number of soybeans were left rotting in fields.
While the 500,000 ton purchase is small solace for farmers, a continued commitment to increasing purchases by the Chinese would be a welcome sign.
The move also shows that Beijing is perhaps serious about following through on promises made during Trump and Chinese President Xi Jinping's dinner at the G20 meeting in Buenos Aires, Argentina.
On Tuesday, Chinese Vice Premier Liu He - the country's top trade negotiator - promised US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin that China would soon deliver on short-term fixes like soybean purchases and lowering of tariffs on US-made cars.
The news also comes after reports that Beijing plans to drop its Made in China 2025 plan, a medium-term strategy for economic dominance. While the move may be largely symbolic, Trump has railed against the plan since the start of the trade war.
The purchases will also ease Chinese concerns about soybean supply. The country uses the beans as feed for the large number of hogs in China and had been relying on producers like Brazil and Argentina to meet the shortfall.