China Considers U.S. Farm Goods Purchases by Early Next Month

(Bloomberg) --

China is considering making some purchases of U.S. agricultural goods by early March as a way to show it’s still committed to its phase one trade deal, according to people familiar with the matter.

The government is in discussion over what commodities it could potentially buy at the end of February or early March, said the people, who asked not to be identified because the information is private. While no final decision has been made, the purchases would show China plans to stick to the U.S. trade deal that came into effect last week, despite the spread of coronavirus, the people said.

As part of the deal, Beijing has pledged to buy an additional $32 billion in farm goods over the next two years and will strive for another $10 billion of purchases. But the spread of the epidemic, which has already claimed more than 1,700 lives, is keeping the Chinese population at home, curbing demand of everything from meat to copper.

While Beijing may buy some farm goods in the next few weeks to show its commitment to the deal, the virus will probably disrupt the schedule for its purchases this year, especially in the first quarter, when some shipments may be delayed, according to the people. It will seek to make up for the delayed purchases later in the year assuming the virus is controlled, the people said.

Soybean futures traded in Chicago rose 2.4% last week, a second weekly gain and the biggest so far this year, on expectations of China’s purchases. While it’s still cheaper to buy supplies from Brazil, American exporters sold at least four cargoes to China due to harvest delays and a logjams plaguing ports in Latin America’s biggest economy.

China’s Ministry of Commerce didn’t immediately respond to a request for comment.

To contact Bloomberg News staff for this story: Isis Almeida in Chicago at ialmeida3@bloomberg.net;Niu Shuping in Beijing at nshuping@bloomberg.net;Steven Yang in Beijing at kyang74@bloomberg.net

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Alexander Kwiatkowski, Sharon Chen

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With assistance from Bloomberg