A recent news article reported that Chinese imports of U.S. soybeans increased in February, contributing to a narrowing of the trade deficit between the two countries.  Nonetheless, the imports were significantly lower than last February.   Meanwhile, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin continued trade negotiations with China in Beijing last week.  Chinese Vice Premier Liu He travels to Washington, D.C. this week, as the talks continue.

China Soybean Purchases

Last week, Reuters writers Hallie Gu and Dominique Patton reported that, “China’s imports of soybeans from the United States in February surged from January as the cargoes booked following a truce in the trade war between the two countries arrived, according to customs data published on [March 25th].

China brought in 907,754 tonnes of U.S. soybeans in February, up from 135,814 tonnes in January, the General Administration of Customs said.

“However, that was just a fraction of the 3.35 million tonnes imported in February 2018 as Beijing’s hefty tariffs on U.S. shipments curbed purchases.”

The Reuters article pointed out that, “China brought in 1.986 million tonnes of Brazilian soybeans in February, up 13 percent from the 1.75 million tonnes in the same month last year, customs data showed.”

“Most recently, Chinese buyers booked about 1.7 million tonnes following U.S.-China trade talks in Washington, during which U.S. officials said Beijing vowed to buy an additional 10 million tonnes of the oilseed,” the Reuters article said.

The article stated that, “Accelerated Chinese buying of U.S. soybeans helped to narrow the U.S. trade deficit by the most in 10 months in January, according to U.S. Commerce Department data on Wednesday.”

Mr. Plume added:

Thursday’s deals bring China’s total purchases of the latest U.S. soybean crop to around 12.7 million tonnes, compared with more tan 28.5 million tonnes sold at the same point last year, to according to U.S. Department of Agriculture data.

And on Monday, Reuters writer Mark Weinraub reported that, “U.S. exporters sold 828,000 tonnes of soybeans to China, the U.S. Agriculture Department said on Monday, the second sale announced since the two countries concluded their latest round of negotiations last week to end their trade war.”

The Reuters article noted that, “China has stepped up its purchases of U.S. soybeans during negotiations to end the trade war between the two countries but the amount purchased remained well below typical levels. The U.S. soybean stockpile has ballooned to record levels during the dispute.”

“Prospective Plantings, Grain Stocks, Rice Stocks- Executive Summary,” Lance Honig, Chief Crops Branch. USDA- National Agricultural Statistics Service (March 29, 2019).

Trade Talks in Beijing Last Week, and in Washington, D.C. This Week

Late last week, Bloomberg’s Sarah McGregor and Kevin Cirilli reported that, “The Trump administration is prepared to keep negotiating with China for weeks or even months to reach a trade deal that will ensure the world’s second-largest economy improves market access and intellectual-property policies for U.S. companies, a senior American official said.

“‘This is not time-dependent. This is policy- and enforcement-dependent,’ White House economic adviser Larry Kudlow said in a speech in Washington on Thursday. ‘If it takes a few more weeks, or if it takes months, so be it. We have to get a great deal, as the president says, that works for the United States. That’s our principal interest.’”

Wall Street Journal writer Lingling Wei reported Thursday that, “The two sides are aiming for a package deal that includes substantial increases in U.S. exports to China and Chinese pledges to address some long-running structural issues, such as allowing greater market access to American companies and boosting protection of intellectual property. Important issues still to resolve include how to enforce a deal and the pace at which the U.S. and China will roll back the tariffs on hundreds of billions of dollars in goods imposed in the past year.

“Chinese Commerce Ministry spokesman Gao Feng told reporters on Thursday that while some progress has been made, ‘much work remains to be accomplished.’”

“The February 2019 average price received by farmers for soybeans [in Iowa], at $8.38 per bushel, was down 22 cents from the January price and 98 cents below the February 2018 price.” (Iowa Ag News – Monthly Prices. USDA- National Agricultural Statistics Service, Upper Midwest Regional Field Office (March 28, 2019)).

On Friday, Bloomberg writers Jeff Black and Jenny Leonard reported that, “Chinese and U.S. negotiators made ‘new progress‘ in trade negotiations as both sides discussed the wording of an agreement that’s designed to resolve a bilateral trade dispute, according to Beijing’s official news agency Xinhua.“The report echoed officials familiar with the talks who said negotiators have been working line-by-line through the text of an agreement that can be put before President Donald Trump and his Chinese counterpart Xi Jinping.

“U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin held meetings in Beijing Friday partly to ensure there were no discrepancies in the English- and Chinese-language versions of the text, and also to balance the number of working visits to each capital, according to the officials, who asked not to be identified because the talks aren’t public.”

Black and Leonard noted that, “As China nears agreement with the U.S., officials are keen to maintain an appearance of equality between the two sides, which explains the focus on matching visits to Beijing and Washington, the people said. While talks have taken place by phone over the past month, the last face-to-face meetings took place in Washington in February.”