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Bunge CEO: China Has Ceased All Purchases of U.S.-Grown Soybeans

With the threat of a trade war between the United States and China still looming, it appears China has ceased all purchases of soybeans grown in the U.S.

Soren Schroder, CEO of Bunge, one of the leading private exporters of soybeans globally, said in an interview that China is purposefully not purchasing the cash crop from U.S. suppliers.

While the New York-based international company has been able to use supplies from outside the U.S. to fill China-bound soybean shipments, Schroder maintained that the his company and the market at large would favor free trade over the current situation.

Chinese purchases of soybeans are currently being made predominately from Brazil, with the early spring season being when South American countries complete their harvests and see a significant uptick in agricultural exports. The United States Department of Agriculture expects that Brazil’s global lead on soybeans exports will expand to record levels in the 2017-2018 season.

While soybeans futures dropped on Wednesday in the wake of Schroder’s statement, it only did so by a single percent, and remains up eight percent for the year, reflecting both the market’s continuing confidence in the soybeans trade and its belief that the tensions between the United States and China are temporary.

In early April, the Chinese Ministry of Commerce, responding to the Trump administration’s proposed tariffs on $50 billion worth of Chinese goods, including steel, announced an equivalent retaliatory tariff on numerous American products, including numerous agricultural products such as soybeans, peaches, poultry, nectarines, pork, sorghum and corn. No effective date was announced, reportedly to allow for the possibility of negotiation. The move was followed up in late April by an announcement to terminate a net 62,690 metric tons of U.S. soybean purchases.

China is the second-largest market for U.S. agricultural exports, according to the USDA, as well as the world’s largest importer of soybeans. With areas such as Republican-voting Iowa and rural California being some of the country’s largest producers of the crop, it is possible that these tariffs are been specifically targeted to politically undermine the Trump administration.

U.S. Willing To Work With China To Avoid Trade War

The United States made it known on Wednesday that the country is willing to enter negotiations to resolve what is threatening to become a serious, long-term trade war with China. The announcement by the Trump administration comes after Beijing displayed its displeasure with planned U.S. tariffs on products imported into the country from China by promising to do the same in regards to American imports into their country.

Less than 12 hours after the Donald Trump administration made public a proposal to implement a 25% tariff on more than 1000 Chinese products in a variety of industries, China flexed their might with a list of similar import taxes on a number of American-made imports.

The fast and stern response on the part of China has many around the globe fearful that a serious trade war is imminent between two of the world’s largest economic superpowers.

President Trump responded to the news of Beijing’s retaliation with defiant messages posted on Twitter, but other members of the cabinet were more tempered in their response.

Larry Kudlow, the man entrusted to be the top economic advisor for the Trump, said that the possibility exists that the proposed tariffs on Chinese goods may actually never go into effect. Kudlow furthered his position while speaking to Fox News, saying that he thinks there will be intense negotiations soon taking place between the two countries in lieu of the bitter trade war that many are predicting.

Cui Tiankai, the Chinese ambassador to America, met with John Sullivan, the Secretary of State, for an hour-long meeting that took place at the State Department.

The fact that the proposed trade actions against Chinese imports have no schedule for enforcement is a source of optimism on both sides of the issue as the counteracts China threatens to levy in return will begin unless the United States proposal becomes active.

The hopes are that a full agreement can be reached between the two countries and an all-out trade war can that could threaten the stabilization of the world economy can be avoided.

The threat of a trade war showed immediate effects on Wall Street as the market fell sharply before rebounding to end one percent higher than before China make known the counterattack it has planned.