China and US have agreed to hold trade talks in the coming days to evaluate the progress of their Phase 1 trade deal signed on Jan. 15, the Chinese commerce ministry said on Aug. 20.
US soybean prices are expected to be supported by this announcement, market sources said. China is the biggest market for US agricultural commodities, including soybeans.
According to S&P Global Platts, SOYBEX FOB New Orleans for October loading was assessed at $374.79/mt on Aug. 19, up 3% month on month.
Without specifying the exact date of talk resumption, the Chinese ministry spokesperson, Gao Feng said that the two countries will conduct next round of trade meetings through phone and both sides will review the Phase 1 trade progress.
Last week, an online meeting was scheduled between the world's biggest economies to discuss bilateral trade progress. However, US President Donald Trump deferred the Aug. 15 meeting, citing his disappointment over China's handling of the coronavirus pandemic. Trump said Aug. 18 that he postponed trade talks with China, also citing the pandemic.
The US-China Phase 1 deal marked an end to a two year trade spat between Beijing and Washington. Both countries levied retaliatory tariffs on each-other worth billions of dollars. After a series of bilateral talks, both nations decided to put an end to their tariff dispute in December 2019.
Under the Phase 1 deal, Beijing promised to purchase $200 billion worth of US products in two years, with agricultural imports valued at $80 billion, including raw soybeans.
In dollar value, soybean comprises over 60% of total US agricultural exports to China annually.
China's purchase of US goods, including the oilseed is well below the Phase 1 trade pace, according to the latest customs data.
While China is expected to purchase over 43 million mt of US beans in 2020, the Asian nation has so far imported roughly 20% of that volume, said a New York based agricultural analyst. So for rest of the year, Beijing will need to buy record monthly volumes of US beans to uphold the Phase 1 trade deal, which is very unlikely.
On the contrary, US trade officials hold a more optimistic outlook towards the US soybean sales to China under the Phase 1 deal.
"We expect China to purchase huge volumes of US soybeans from September, once the beans harvest starts," said a top US trade official.
However, market participants are uncertain over the longevity of US-China trade truce.
Both countries are yet to agree on key issues, such as proprietary theft, technology transfer, Hong Kong, Taiwan and the South China Sea, an analyst said. So, Phase 1 trade deal is treading on unstable ground.
