China needs 'explosive' buying to meet US farm import target – Reuters

Early Thursday, Reuters came out with the piece suggesting further hardships for the Sino-American trade deal as the dragon nation will require huge buying to make it happen.

Key quotes

With nearly seven months gone, an ambitious $36.5 billion target for Chinese imports of US farm goods this year may not be quite out of reach, but it’s looking like a big, big stretch.

By end-May, imports were running behind 2017 levels - rather than 50% ahead as needed - and while orders for China’s main farm import, soybeans, have started to pick up, scorching levels of buying would be needed to hit the mark.

Add in a rapid deterioration in U.S.-China relations, an upcoming U.S. election, a global pandemic and questions over just how much soybeans China actually needs, and farmers and analysts say it may be a stretch too far ‘It just doesn’t seem likely to me,’ said John Payne, senior futures & options broker with Daniels Trading in Chicago. ‘If the global economy was more normal then maybe, but you have this whole COVID problem.’

The chances of meeting the target will be clear in the next few months. Soybeans typically account for about half of China’s U.S. farm imports and the vast bulk of buying comes in the last three months of the year when supplies from top grower Brazil dry up.

It should also be noted that Global Times (GT) editor Hu Xijin took over Twitter to criticize the US performance in taming the coronavirus (COVID-19):

Novel coronavirus will present a medal to the US government, for this government standing firmly with the virus, helping it kill as many American people as possible. Most of the US senior officials will be safe because the virus needs them.

FX implications

This adds to the market’s risk-off mood wherein the S&P 500 Futures and US Treasury yields are pressured as we write. On the other hand, stocks in Asia-Pacific also trim the early-day gains by the press time.