China likely to raise US agricultural product purchases in 2021: analysts
Published: Dec 08, 2020 08:03 PM

A combine and a grain cart work in a soybean field of Pellett family's farm in Atlantic, a small city in Iowa, the United States, Oct. 16, 2019.Photo:Xinhua

China is likely to further increase purchases of US agricultural products, particularly soybeans, in 2021, as Beijing continues to fulfill its commitment under the phase one trade agreement and domestic demand surges, according to industry and trade analysts.

However, the US will need to ensure steady supplies and remove hurdles, such as tariffs, to help carry out the closely watched trade agreement between the world's two biggest economies, analysts added.

Chinese buyers have started to purchase US farm products from next year's crops, including soybeans and corn, much earlier than usual, though the purchases were fewer than five cargoes, Bloomberg reported on Tuesday, adding that the early deals were fueled by growing demand in China for US farm goods.

However, Zhang Xiaoping, country director for China at the US Soybean Export Council, said that there have been no early purchases of soybeans to be delivered in the fall of 2021.

"But there are nearly 10 million tons that are due to be delivered before next August waiting to be executed," Zhang told the Global Times on Tuesday, adding that purchases of US soybeans are expected to exceed those of this year, given surging demand and the implementation of the phase one deal.

"Market demand might be a factor, but the main factor is the continued implementation of the phase one trade agreement," Li Guoxiang, a researcher with the Rural Development Institute of the Chinese Academy of Social Sciences, told the Global Times on Tuesday.

In the first 11 months of the year, China's soybean imports grew 15.2 percent year-on-year to $36.26 million, while imports of grains increased 22.5 percent year-on-year, according to data released by the General Administration of Customs (GAC) on Monday.

While the GAC did not release data for soybean purchases from specific countries, China has been increasing imports from the US, as part of the phase one trade agreement. Data from the US Trade Representative's Office showed that China bought 8.7 million tons of US corn as of October, an all-time high, and record levels of soybeans.

"In the medium to long term, China will continue to rely on imports for some agricultural products, such as soybeans," Li said, adding that with the phase one deal, much of the massive demand will be filled with US purchases. However, imports will also depend on the prices of US products. 

News of China's early soybean purchases helped lift export prices to the highest in six years, according to Reuters. 

"If prices for US agricultural products are too high, then naturally the eventual imports will not be as big," Li said, adding that the US should ensure steady supplies, while removing hurdles, such as tariffs, to lower costs for Chinese buyers.

US President-elect Joe Biden has stated that he would not immediately remove tariffs on hundreds of billions of dollars worth of Chinese products, dimming prospects for a timely resolution of the ongoing tariff war. However, analysts also say that both sides will likely seek a way to phase out the bruising tariffs, which are opposed by many businesses in the US and around the world.

"Both factors [market demand and price, and implementation of the phase one deal] show" that China will significantly increase imports of US agricultural products, Gao Lingyun, an expert at the Chinese Academy of Social Sciences in Beijing, told the Global Times on Tuesday.