China is back in the market for U.S. soybeans, but the recent purchases represent just a fraction of sales American farmers have lost since the Trump administration embarked on a trade war with Beijing in July.
Chinese state-owned companies bought at least 500,000 tons of U.S. soybeans on Wednesday, two U.S. traders told Reuters, in the first major purchases since U.S. President Donald Trump and his Chinese counterpart Xi Jinping met in early December.
The deals - valued at some $180 million - helped propel U.S. soybean prices to a 4-1/2-month high on the futures market Wednesday. U.S. stock prices were also buoyed by signs that the soybean purchase could represent a thaw in the trade tensions between Washington and Beijing. The two nations are currently negotiating to end the tariff tiff.
One trader knew of nine cargoes traded and said there were probably more. A second trader with direct knowledge of the deals said Chinese state-owned firms bought at least 12 cargoes for shipment between January and March.
But the purchases will do little to make up for lost sales by American soybean producers, who have been scrambling to find other buyers as this year's harvest has backed up in storage facilities. China is the largest buyer of U.S. soy, but has purchased little since Beijing slapped steep tariffs on U.S. shipments on July 6 in retaliation for duties on Chinese goods.
So far this year, American farmers have sold some 8.2 million metric tons of soybeans to China, down from 21.4 million metric tons during the same period in 2017, according to the latest USDA figures. For the month of October, soybean sales to China fell from 7.1 million metric tons last year to just 300,000 metric tons this year.
U.S. soybean farmers have made some strides in finding new markets, but export shipments in October were a little more than half the level seen last October.
China last year purchased about 60 percent of U.S. soybean exports in deals valued at more than $12 billion. With those exports gone, soybean prices had tumbled to their lowest in a decade, heaping pain on U.S. farmers, a key Trump constituency.
U.S. soybean farmers have largely stood by the president in his efforts to put pressure China on its trade policies. Congressional districts that encompass much of American soybean production largely elected Republicans during the latest midterm elections. But Democrats narrowed the margins of victory in many of those districts.
For its part, China faces shortages of soybeans if it can't find sufficient supplies from other producers. In September, Chinese officials floated the idea of cutting the soy ration for hogs to reduce domestic demand.
China slapped a 25 percent tariff on U.S. soybean imports after the Trump administration imposed 10 percent tariffs on some $250 billion of Chinese goods. Trump had threatened to boost those tariffs to 25 percent next month, but recently agreed to postpone the increase for 90 days after meeting with Xi at a recently gathering of world leaders in Argentina.
After months of stonewalling from both sides, Washington and Beijing have agreed to negotiate for those 90 days over increased Chinese purchases of American farm and energy commodities, an end to forced technology transfers and stronger protections for U.S. intellectual property n China.
Trump said on Tuesday that those negotiations were already taking place by telephone.
"We'll probably have another meeting. And maybe a meeting of the top people on both sides," Trump said. "If it's necessary, I'll have another meeting with President Xi, who I like a lot and get along with very well."
Trump did not offer any timetable for further face-to-face meetings among U.S. and Chinese officials.
He said he would wait to increase tariffs on Chinese goods to 25 percent from 10 percent until it becomes apparent whether the United States and China can make a deal.
(Reuters contributed to this article.)