The spread of coronavirus in China has led to questions about whether they can meet their first year commitment of $36.5 billion under the Phase One agreement. American Soybean Association CEO Ryan Fridlay says he thinks it may be a tough lift, but its’ too early to determine the impact on demand.
Article 7.6 in the agreement is an out clause that would allow China to consult on the purchases in the case of a natural disaster like coronavirus. However, Fridlay says they hope the administration will push China to keep their end of the deal.
China could also delay or backload purchases, which Fridlay says is reasonable and even expected as they have said they will buy according to “market factors.”
Fridlay says they also see the 25-percent tariff on U.S. soybeans slightly limiting purchases, but China can and has granted duty-free import tariffs for soybeans and other products.
