MNI SOURCES: China Still Buying U.S. Soybeans, No Tariff Plans

--Soybean Orders Placed With US Suppliers Despite Reports

--Government Assures Buyers Trade Soybean Can Proceed

     BEIJING (MNI) - Chinese soybean buyers are still placing orders with U.S.

suppliers and will continue to do so, despite reports Beijing had ordered a halt

to purchases in an escalation of trade tensions with Washington, sources have

told MNI.

     Traders, including at state-owned firms, have been given assurances that

shipments will continue to receive exemptions from tariffs imposed during the

drawn-out trade dispute between one of the world's largest soybean producers and

the largest buyer.

     According to the sources, the traders were told by a Chinese ministry that

media reports circulating Monday were false. The reports suggested the

government had ordered state firms to halt purchases following U.S. President

Donald Trump's threats to impose sanctions over China's plan to draft a new

security law for Hong Kong. The reports had raised concerns that the 'Phase One'

trade agreement may be in jeopardy.

     Two key state-owned trading firms, Sinograin and Cofco, continued placing

soybean orders this week, including deals made on the day the reports surfaced,

although some purchases may have been relatively small, likely from commercial

considerations, said the source. On Tuesday, the U.S. Department of Agriculture

website reported sales of 132,000 tonnes to China for delivery in 2020/21.

     --SOYBEAN FOCUS

     U.S. soybean sales to China fell sharply in 2018 from high levels in 2017,

before picking up in 2019 and early 2020. China's soybean purchases have already

exceeded the 2019 level in the same period, China's General Administration of

Customs data shows.

     Concerns over the reliability of South American soy exports during the

coronavirus pandemic may also tilt purchases towards the U.S., a source close to

the government said.

     China needs soybeans as it rebuilds pig herds nearly halved in size by

African Swine Fever in 2018-2019, sending pork prices to record-high levels.

Ensuring sufficient pork supply is a priority for policymakers to anchor loose

monetary policy without fanning inflation, a third source told MNI.

     Despite continuing Chinese imports of U.S. soybeans, both industry and

government sources agreed that it will be nearly impossible for China to meet

targets agreed with the U.S. for food purchases this year, due to both the

pandemic and logistical snags.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: archie.zhang@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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