China likely to buy US corn, DDGS, meat, but only as part of a deal: Perdue

A US-China trade deal will likely include Chinese commitments to buy a certain volume of US corn, soybeans, meat, DDGS, and ethanol, but any purchases would only likely appear after a deal has been struck, the US agriculture secretary told Bloomberg in a televised interview.

In the interview, aired late Monday, Perdue said that there had been firm numbers talked, but refused to disclose the volume or value.

“They (the commitments) are really all over the board: in the meat sector; in the cereal sector; the grain and oilseed; as well as DDGS and ethanol. So really it’s a broad array that would be very good for agriculture if we can consummate the deal," Perdue said.

“There have been numbers that have been discussed… it’s not appropriate to talk about that because negotiations are ongoing. But it would be the easiest way for China to help reduce quickly the trade deficit with the United States,” he said.

The statement is the first confirmation from either side that a trade pact will involve multi-year commitments to buy a range of US agricultural goods.

It is unclear when a deal will be discussed, but reports suggest that it will not be until June at the earliest following the cancelation of a trade summit in Florida next week.

$50-100bn

The US and China are locked in talks about the terms of a new trade deal, with US negotiators keen to reduce the trade deficit and stop what they say amounts to intellectual property theft.

Meanwhile, China wants US tariffs on Chinese imports on an array of goods removed.

In a gesture of goodwill, Chinese officials have pledged to buy a total of 20 million mt of soybeans from US farmers, with around 60% of those beans being contracted already.

However, rumours in the market that similar pledges have been made for ethanol and corn have proven to be erroneous and Perdue told Bloomberg that any further commitment would likely be “part of the package” of the final deal.

In 2017, the US exported $24 billion worth of agricultural goods to China, although Perdue said this figure could easily be dwarfed by a new trade deal.

“We could easily see doubling or tripling that kind of number over two to four to five years,” he said.

Yet while Perdue talked up the chance of a trade deal with China, he was pessimistic of one with the EU, saying the talks have reached a stalemate over the issue of agriculture.

“This is just simply intractable they have refused to negotiate on agricultural issues, taking a very protectionist view on agricultural products going into the EU,” he said, adding that the US cannot do a trade deal with the EU without the sector being included.