According to Reuters, confidential sources in China have confirmed that the Central Government has instructed official importing agencies to cease buying U.S. agricultural products.  Importers have cancelled up to 20,000 tons of pork and purchases of corn, cotton and soybeans appear to be suspended.  USAPEEC reported that last week, shipments of chicken were subject to additional scrutiny over precise completion of export documentation.

Notwithstanding rumors concerning the intended action by the Government of China, orders were placed for three cargoes amounting to 180,000 metric tons (6.7 million bushels) for October and November delivery, falling in the 2020/2021 market year.

In terms of the January 15th Phase One Trade Agreement, China was to have purchased $32 billion in U.S. agricultural products over a two-year period, referenced to a 2017 baseline.  Even taking into account the fact that China purchases the bulk of soybeans from the U.S. after August of each year, shipments year-to-date have not matched the pre-2018 rate.  For the first quarter of 2020, soybean shipments to the value of $1.03 billion and pork valued at $691 million were exported to China.

The Administration must recognize that China is extremely sensitive over Hong Kong, which it regards as an internal matter.  Even muted responses from the White House such as the measures announced on Friday May 29th will lead to a complete collapse of whatever goodwill exists between the nations. Revocation of the Phase One Trade Agreement is therefore a possibility.  This will be to the detriment of the agricultural sector that has planted 83.5 million acres to soybeans and is anticipating a harvest of 4.125 billion bushels.