USDA announced Thursday export sales of 130,000 metric tons of U.S. white wheat for delivery to China, a sale that comes one week ahead of the next round of bilateral trade negotiations. It’s the first significant purchase announcement for Chinese importers above 100,000 metric tons since China slapped a 25% tariff on the grain last year.
“We are glad for this purchase ahead of the latest round of trade discussions between the U.S. and China,” said U.S. Wheat Associates Chairman Doug Goyings. “It remains to be seen if this is the start of a return to steady purchases by China. In the long run, that is what our farmers need, along with good progress toward an agreement and continued support for the rules-based trading system that has given them access to more markets.”
U.S. wheat exports to China were increasing before the trade war, but that ended when the tariff was imposed in July, 2018.
The 25% tariff on U.S. wheat has made the price of American grain uncompetitive with wheat from elsewhere. Chinese importers have been mainly buying from Black Sea and Central Asian countries, the USDA's Foreign Agricultural Service said in a recent report.
U.S. wheat exports to China rose dramatically to 1.5 million tons in the 2017 calendar year, up from about 900,000 tons in 2016 and 550,000 tons in 2015, according to USDA data. But then sales dropped off to just 397,000 tons last year, when the tariff was implemented half way through, and a mere 42,000 tons so far this calendar year; the announced 130,000 metric ton purchase is for delivery in the 2019-20 marketing year, which began June 1.
China buys U.S. hard red spring, soft white, hard red winter and soft red winter wheat.
The Chinese know U.S. trade negotiators are going to be again pushing hard for major policy changes next week, one government official tells Agri-Pulse, but when it comes to agriculture the Trump administration places a heavy value on “purchases, purchases, purchases.”
Beside wheat, China is continuing its latest spree of soybean purchases in an effort to meet promises to the Trump administration as the Oct. 10-11 trade talks loom.
FAS also announced on Thursday an export sale of 252,000 tons of U.S. soybeans for 2019-20 delivery. That comes on the heels of a Wednesday notice of 464,000 tons sold to China.
Meanwhile, USDA’s latest weekly export sales report for Sept. 20-26 again put China as the largest net buyer and importer of U.S. soybeans. Weekly net sales to China totaled about 1.6 million tons and physical exports totaled 138,800 tons.
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