CHICAGO (Reuters) - The U.S. Department of Agriculture (USDA) on Friday reported a large soybean sale to China, an apparent goodwill gesture a day before the first meeting between U.S. President Donald Trump and Chinese President Xi Jinping in seven months.
The trade war has curbed exports of U.S. crops to China and looms over the Group of 20 (G20) summit in Japan. Expectations have dimmed that the world’s two biggest economies can ease tensions when Trump and Xi meet in Osaka on Saturday.
The USDA said Chinese importers bought 544,000 tonnes of U.S. soybeans for shipment in the 2018/19 marketing year which expires Aug. 31. It was the largest U.S. soybean sale to China since late March, USDA data showed.
The USDA said in a statement the sale was new and not a change of destination of a previously announced sale.
The deal surprised some traders as soybean export premiums for late-summer shipments were unchanged this week, showing little evidence that a large purchase was occurring, and because recent large purchases have come only after talks between the two countries.
A sharp drop in China’s hog herd, which consumes most of the soybeans processed by the world’s largest pork market, due to a deadly hog disease called African swine fever has also reduced demand for the oilseed.
“To me it looks like a good faith purchase, which we’ve seen before, although in the past they came after the two presidents shook hands. Today it’s coming before they do so it may be trying to influence talks,” said Arlan Suderman, chief commodities economist for INTL FCStone.
“All this comes against a backdrop of China having ample supplies of soybeans and talk of them delaying shipment of July beans into August because of the big supplies,” he said.
Beijing had agreed to buy nearly 14 million tonnes from American farmers over December to March during a temporary truce in the trade spat.
More than 8 million tonnes of those have already been shipped to China, but about 6 million tonnes, including Friday’s sale, still need to be delivered.
Trump said on Friday he hopes for productive talks but made no promises about a reprieve from escalating tariffs that have cast a shadow on global growth.
U.S. soybean exports to China have plunged by more than 80 percent since Beijing slapped steep tariffs on shipments last July. China, the world’s top soybean importer, is on pace for its smallest U.S. soybean imports in 11 years as importers there have increased purchases from South America, mainly from top exporter Brazil.
Reporting by Karl Plume in Chicago; Editing by James Dalgleish