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China ag purchase commitment needs clarity during U.S. talks

The chief marketing strategist with Zaner Ag Hedge says he wants more clarity on China’s $17 billion U.S. ag purchase commitment as the two countries meet this week.

“I think there’s a lot of confusion about that $17 billion in ag and ag related products, not including soybeans,” says Ted Seifried.

He tells Brownfield it appears to be a commitment China hasn’t followed through on yet.

“We definitely want clarity on the specifics of that,” he says. “It would be great to hear some numbers, or at least, at the very baseline that it’s actually going to happen. We’ve not seen indiciation of that so far.”

He says China has bought some other ag products, including cotton, pork and sorghum, in recent weeks.

“Anything is a dramatic increase from last year, but nothing is a dramatic increase from previous years. In fact, a lot of it is down.”

Seifried says China is buying U.S. soybeans, and has followed through on its purchase commitment of 12 million metric tons made last fall, and is well on their way to reaching 25 million metric tons that was pro-rated.

Seifried says China reducing its tariffs on U.S. ag products would likely benefit the U.S. in the long-run, but probably won’t incentivize China to buy more in the near-term.

He says the grain markets are showing optimism heading into the meeting.

“I’m really curious as to if we have a “positive outcome,” if we get clarification on the $17 billion U.S. ag and ag-related products and we see a reduction in tariffs, does the market respond positively to that or is this more of a buy the rumor, sell the fact type of event?”

The U.S. and China are scheduled to meet on Thursday.