China and the USA have struck a 90-day temporary truce in their trade war and agreed not to impose additional tariffs on each other’s goods that were due to take effect on 1 January, a move which has boosted the futures price of soyabeans.
"President Trump has agreed that on 1 January 2019, he will leave the tariffs on US$200bn worth of products at the 10% rate, and not raise it to 25% at this time," according to a 1 December White House statement from the G20 Leaders’ Summit in Argentina.
"Both parties agree that they will endeavour to have this transaction completed within the next 90 days. If at the end of this period of time, the parties are unable to reach an agreement, the 10% tariffs will be raised to 25%," the statement added.
In addition, China had agreed to buy an unspecified, substantial amount of agricultural, energy, industrial and other products from the USA to reduce the trade imbalance between the two countries, the White House said.
In early July, the USA imposed tariffs on some Chinese imports, accusing China of “unfair trade practices”. China responded with 25% tariffs on several US imports, including soyabeans, which were the USA’s largest agricultural export to China. The USA then imposed 10% tariffs on US$200bn worth of Chinese imports on 24 September, which prompted China to impose 25% duties on a wide range of US food products including several edible oils.
The White House said American and Chinese officials would spend the 90-day window negotiating on technology transfer, intellectual property and agriculture.
However, the Chinese statement regarding the meeting did not address the 90-day window, or the specific goods it would start to buy from the USA, or any time frame for when this could start.
“My big question mark is will China come in and buy US soyabeans … because they still buy their beans from Brazil,” commented Joe Vaclavik of the commodities brokerage firm, Standard Grain. “The best months for US exporters have really past – September, October, and November – that's when we do the majority of our business. Could we sell some beans to China in the next couple of months prior to the Brazilian harvest? I suppose that’s certainly a possibility.”
“We’ve still got a huge US bean crop. We've got record supplies. We're not doing the demand or the export business that we need to do in order to meet United States Department of Agriculture (USDA) projections at this point,” Vaclavik said.
Bloomberg reported on 3 December that soyabeans for January delivery rose 2% to US$9.12/bushel in Chicago, leading advances among US crop futures following news of the trade truce.