CHICAGO (Reuters) - Global grains trader Archer Daniels Midland Co (ADM.N) remains optimistic that China will meet its Phase 1 trade deal farm product purchase commitments despite the slow pace of buying so far and recent criticism of China by U.S. President Donald Trump.
Lower commodity prices due to the coronavirus pandemic may limit the value of China’s first year U.S. agricultural product purchases, “but it’s a two-year agreement,” ADM CEO Juan Luciano said during the virtual BMO Capital Markets Global Farm to Market Conference on Wednesday.
Concerns have been rising that China may not reach the deal’s lofty purchasing targets following a sluggish pace of buying in the initial months of the agreement.
A steep drop in commodities prices as the coronavirus pandemic upended global supply chains has fueled further worries that the deal’s targets, measured by value instead of tonnage, would be met.
“The Chinese have been delivering on all their commitments to remove non-trade barriers and to improve the ability of both countries to trade,” Luciano said. “I do believe they have the intention to comply.”
As part of the Phase 1 deal signed in January, China promised to increase purchases of U.S. farm goods by at least $12.5 billion in 2020 and $19.5 billion in 2021, over the 2017 level of $24 billion.
Chinese imports of U.S. agricultural products and related goods totaled just $913 million in February and $952 million in March, the lowest totals for those two months since 2007, according to U.S. Census Bureau data.
China has accelerated purchases of U.S. soybeans since late April after actively buying mostly Brazilian soybeans in recent months.
The U.S. Department of Agriculture has confirmed 532,000 tonnes in U.S. soybean sales to China so far this week. Those sales would be valued at around $500 million at current prices, according to USDA data.
China has about 25% of its August soybean needs met and 22% to 25% of its February 2021 needs filled, while purchases for September through January, typically the peak export period for U.S. soy, remain “completely open,” Luciano said.
Trump said on Monday he opposed renegotiating the deal signed with Beijing in January after saying last week he was “very torn” about whether to end the deal. The U.S. leader has been highly critical of China’s early handling of the coronavirus outbreak and has threatened new sanctions on Beijing.
Reporting by Karl Plume in Chicago; Editing by Chizu Nomiyama and David Gregorio