Goldman Sachs casts doubt on whether China can honor $40 billion in US farm purchases


·         In 2017, China managed to buy around $27 billion worth of U.S. soft commodities and agricultural assets.

·         The number roughly halved in 2018 and 2019 as trade tariffs took hold.

·         Washington wants China to raise farm purchases to at least $40 billion for this year and next.


David Reid, CNBC 

Jan 10 2020


A leading commodities expert at Goldman Sachs has raised doubts over China buying at least $40 billion worth of U.S. farming goods to satisfy terms of the “phase one” trade deal.


The U.S. and China plan to sign the first draft of the trade pact on January 15 which will see tariffs eased and changes introduced to rules surrounding intellectual property and technology. Washington is also demanding that China buys between $40 billion and $50 billion worth of agricultural goods from the U.S. each year.


Speaking to CNBC’s “Street Signs” on Friday, Goldman’s Global Head of Commodities Research Jeff Currie said U.S. live stock and agricultural prices couldn’t yet factor in a coming boost to demand.


“There is still a lot of uncertainty about how you would achieve $40 (billion) or potentially even $50 billion of agricultural purchases,” Currie said, before adding, “A lot of the people I talk to are really skeptical that you can really achieve that number.”


Annual U.S. farm exports to China typically exceeded $20 billion between 2010 and 2018, before falling sharply to around $13 billion over the last two years as trade war duties impacted sales of soy beans and pork.


U.S. Trade Representative Robert Lighthizer told reporters in December that China has pledged to buy a total of $40 billion in agricultural products, although President Donald Trump is calling for $50 billion...


... Currie said while Goldman Sachs had identified soy beans, pork and corn as the likely big winners from the “phase one” trade deal, it would be a question of waiting to see if the physical demand existed... 


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