Corn futures gained on Friday after Chinese officials were said to be preparing to restart purchases of US supplies as soon as next month in another sign that China is working on a lasting detente with the US.
China might buy at least 3 million tonnes of US corn, said people familiar with the discussions, who declined to be identified as the information is confidential.
Corn for delivery in March next year gained as much as 0.8 percent in Chicago as soybeans and wheat declined.
The Chinese government is also considering various options for how to handle the 25 percent retaliatory tariffs on US corn that China adopted in July, the people said.
Ideas include allowing the US commodity to be purchased as part of a 7.2-million-tonne annual corn import quota that is only subject to a lower levy; reimbursing the 25 percent tariff to buyers purchasing outside the quota; and waiting to purchase until after the 25 percent tariffs are removed.
The plan to resume imports follows reports China began significant purchases of US soybeans this week after Chinese President Xi Jinping (習近平) and US President Donald Trump on Dec. 1 agreed on a 90-day truce to work toward a trade deal.
China’s retaliatory tariffs struck at Trump’s heartland voters, who saw agriculture shipments to the world’s biggest buyer of commodities plunge, stockpiles accrue across the US and futures drop.
China effectively suspended corn purchases from the world’s biggest producer in July by imposing the 25 percent tariff as the two nations escalated their trade war.
Purchases within the annual corn import quota would allow buyers to pay just a 1 percent tariff, while those outside the quota are subject to a 65 percent duty.
Unlike soybeans, where China has historically purchased about one-third of the US harvest, the Asian nation has not been a significant buyer of US corn for several seasons.
China is the world’s second-largest producer of the grain and the last time it bought more than 3 million tonnes of US corn in a calendar year was 2013, US Department of Agriculture data show.
Shipments of US grain would help replenish China’s depleted reserves and cover a widening domestic shortfall, analysts have said.
Purchases for state reserves would allow importers to avoid the duty and benefit from cheaper US produce, just as China’s domestic need for animal feed, starch and sweeteners grows apace, they said.
China is forecast to import 5 million tonnes of corn in the 12 months that began in October, the most in four years, the department has forecast.
The potential for corn sales came as the Trump administration has been pushing China to make agricultural purchases beyond soybeans as part of “good faith for the discussions” to ultimately end the spat, department Deputy Secretary Steve Censky said on the sidelines of the Iowa Soybean Association meeting on Thursday.
Other commodities:
Spot gold on Friday decreased 0.3 percent to US$1,238.42 an ounce, down 0.5 percent from last week’s US$1,245.22.
Silver fell 1.5 percent to US$14.64 an ounce on Friday. The metal has gained 2.3 percent so far this month.
Copper was little changed on Friday at US$2.77 a pound.
Additional reporting by AP
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