Monday , May 25 2020

Trump says China to boost farm spending up to $50b


China will at least double its spending on US agriculture as part of a partial trade accord between the two countries that’s likely to be well received by crop traders when markets reopen.
Under terms of the arrangement, spending will scale to an annual figure of $40 billion to $50 billion over two years, Treasury Secretary Steven Mnuchin said. US agriculture exports to China totaled $19.5 billion in 2017, government data show.
Prices of trade-sensitive commodities including soybeans and cotton gained before the announcement as investors anticipated increased Chinese purchasing commitments. If the deal holds, it will be welcome relief to American producers who suffered from depressed prices amid the tit-for-tariffs. China is the world’s biggest consumer of soybeans and cotton. President Donald Trump said US farmers should buy more land and new Deere & Co. tractors in response to partial “phase one” China trade deal.
Some traders expressed a desire to see more details on the agriculture component of the deal before getting too excited.
“This is good news for commodities in general, but the absence of more concrete information and the constant possibility of modification and/or threatening the important ’card game’ is highlighted,” said Murilo Aguiar, a commodity analyst for INTL FCStone in Sao Paulo.
Market watchers also pointed to the need to know about tonnage-commitments. Earlier this week, Chinese officials had discussed offering to buy total US soybean volumes that could exceed 30 million tons, according to people familiar with the situation. Before the trade war, the Asian country bought 30 million to 35 million tons of soybeans in a normal year.
“It really depends on the quantities involved,” said Bryce Knorr, a senior grain market analyst at Farm Futures. “President Trump is focused on a total dollar amount because his goal is the trade deficit. We did $29 billion with China in 2013, thanks in part to some very expensive soybeans. Will China be interested in buying stuff it may not need two years from now if Elizabeth Warren or Joe Biden is in the White House?”
Reaching $40-$50 billion could be “a stretch” given low commodity prices, said Stephen Nicholson, a senior analyst for grains and oilseeds at Rabobank. While increasing meat exports to China would help the dollar figure, it may be hard to hit the upper end, he said.
Trump indicated he could sign a deal with China’s Xi Jinping at an upcoming November summit in Chile.
“There is no deal on paper yet, and that could take five or more weeks,” said Dan Basse, president of AgResource Co. “China seems to have an aversion to signing deals with enforcement, as we saw last May.”

About Admin

Check Also

India plans to start 200 more trains from June 1

Bloomberg Indian Railways will start 200 additional trains from June 1 to ferry passengers as ...

Leave a Reply

Your email address will not be published. Required fields are marked *