WASHINGTON (BLOOMBERG) - China is set to buy a record amount of American soybeans this year as lower prices help the Asian nation boost purchases pledged under the phase one trade deal with the United States, according to people familiar with the matter.
The total from the US will probably reach about 40 million tonnes in 2020, the people said, asking not to be identified because the forecast is not public. That would be around 25 per cent more than in 2017, the baseline year for the trade deal, and roughly 10 per cent more than the record set in 2016, according to data from the US Department of Agriculture.
China has been stepping up purchases of American agricultural goods since the end of April, with soybean sales for delivery next season currently running at their highest level for this time of year since 2013. The Asian nation has also set several daily records in corn purchases, putting it on track to exceed for the first time an annual quota set by the World Trade Organisation.
Still, China's purchases of American farm goods over the first seven months of the year are at just 27 per cent of the target value implied by the trade deal, according to Bloomberg calculations using Chinese customs data, with imports of US beans in July at an unusually low level.
The US and China reaffirmed their commitment to the phase one accord in a biannual review this week, showing a willingness to cooperate on trade even as tensions escalate over issues ranging from data security to the future of democracy in Hong Kong.
The forecast for record purchases comes as supplies from rival Brazil dry up, making US soybeans cheaper. China will ultimately import a best-ever of 96 million to 98 million tonnes from all nations this year, with 40 to 50 per cent of that coming from the US, one person said. Another person said the forecast is for purchases of as much as 40 million tonnes.
In 2017, China imported a record total of 95.5 million tonnes in soybeans from around the world, according to customs.
Chinese purchases of American soy are likely to continue into January, as the majority of supplies exported from Brazil in the first month of the year would normally come from stockpiles and thin reserves will hinder shipments, said Ms Daniele Siqueira, an analyst at consultancy AgRural. Other observers also point to a possible delay in plantings in Brazil due to dry weather.
However, soybean prices and the impact of the coronavirus pandemic will ultimately dictate how much China imports, one of the people familiar said.
When contacted for comment, China's customs referred to publicly available data on the nation's agricultural purchases.