So far, the markets have been at risk this week, despite the harsh words of US President Donald Trump. Trump said on Friday that Washington could potentially take steps to revoke the special status of Hong Kong and possibly impose sanctions and other economic weapons against China.
After the conference, there was news, first reported by Bloomberg, that the Chinese government appeared to be backtracking on the Phase 1 deal. China is said to have told state-owned agricultural enterprises to stop purchasing ‘one of the main US agricultural exports to China and a pillar of the additional 200 billion dollars promised by the agreement. However, it turned out that some transactions are still in progress, even after Beijing officials ordered a pause in some purchases, Bloomberg reports now.
“The shippers have sold up to four shipments of American soybeans from the new crop,” said the people, who asked not to be named because the information is private. State stockgiler Sinograin had made an offer earlier for Pacific Northwest cargoes. to Bloomberg News.
State-managed buyers bought more than 20 shipments, more than a million metric tonnes, or US soybeans in about two weeks in May. In April, China imported a record 86,507 tonnes of American products. pork, up almost 600% from the previous month, according to customs data.
However, the same article reiterates that “Chinese government officials have told major state-owned agricultural enterprises to suspend imports of certain US agricultural products, including soybeans, people familiar with Bloomberg News said on Monday. cotton and corn by state buyers have also been on a break, said one person. “
There are a few exceptions to the order that government buyers Cofco and Sinograin stop buying American soybeans, one of the people said. An exception is when state buyers import on behalf of private companies, which are not affected by the judgment, said the person. Another is when state buyers need the beans to cover their derivative positions, and a third exception is if there are already transactions in progress, the person said.
The market has ignored this risk because there is nothing concrete and there seems to be more bark than bite from both sides of this word war.
However, if some form of real trade confrontation were to take place at a time when US economic policy towards China is less dictated by long-term national interest and more by short-term electoral calculations In the long run, this would certainly have a negative impact on the markets.
For the moment, however, the AUD is lounging in the mood for risk and has firmly rallied to go beyond a key trend line: