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Grain trader still optimistic that China’s purchases of US farm products will hit Phase 1 target

14 May 2020

Global grains trader Archer Daniels Midland Co (ADM) remains optimistic that China will meet its Phase 1 trade deal commitments to increase purchases of US farm commodities.

Reuters reports that ADM’s confidence isn’t shaken by the slow pace of Chinese buying and the recent criticism of China by President Trump.

Lower commodity prices due to COVID-19 may limit the value of China’s first year US agriculture product purchases, "but it's a two-year agreement," ADM CEO Juan Luciano said during the virtual BMO Capital Markets Global Farm to Market Conference on Wednesday.

Concerns have been rising that China may not reach the deal's lofty purchasing targets following a sluggish pace of buying in the initial months of the agreement.

A steep drop in commodities prices as the coronavirus pandemic upended global supply chains has fuelled further worries that the deal's targets, measured by value instead of tonnage, would be met.

"The Chinese have been delivering on all their commitments to remove non-trade barriers and to improve the ability of both countries to trade," Luciano said. "I do believe they have the intention to comply."

As part of the Phase 1 deal signed in January, China promised to increase purchases of US farm goods by at least $12.5 billion in 2020 and $19.5 billion in 2021, over the 2017 level of $24 billion.

Chinese imports of US agricultural products and related goods totalled just $913 million in February and $952 million in March, the lowest totals for those two months since 2007, according to US Census Bureau data.

Trump said on Monday he opposed renegotiating the deal signed with Beijing in January after saying last week he was "very torn" about whether to end the deal. The US leader has been highly critical of China's early handling of the coronavirus outbreak and has threatened new sanctions on Beijing.

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