On January 15, 2020, the first phase of the China-U.S. economic and trade agreement was successfully signed at the White House. This marked the end of the trade dispute between China and the United States after nearly two years. In the next period of time, the two sides will continue to implement the agreement in accordance with the content of the agreement. Eliminate tariffs on some goods. At the same time, China has pledged to increase its purchases of US$200 billion in US goods over the next two years, including purchases of US cotton. Therefore, since the signing of the agreement, market participants have been paying close attention to the progress of China’s import of US cotton.
So what is the situation with China’s purchase of US cotton? According to the US Department of Agriculture’s Zhoukou export sales report in the past two months, China is in the leading position in terms of contract signing volume basically every week. This has something to do with the fact that China officially launched the elimination of U.S. cotton tariffs in February. According to feedback from some domestic companies applying for tariff exclusion, the review period for early application for exclusion is relatively long. Currently, companies only need to complete the exclusion application process in one working day based on their own needs. On the other hand, as of April 22, among the 12 batches of exclusion lists of US$200 billion taxed products, 11 batches involve textiles, involving a total of 48 textile tax numbers. The excluded products will no longer be added when exported to the United States. 301 tariffs levied. Therefore, judging from the current situation of specific implementation of tariff exclusions by both parties, Sino-US trade is temporarily moving in a favorable direction.
According to foreign media reports, Trump’s remarks during an exclusive interview with Fox News at the Lincoln Memorial in the United States on May 3 once again caused all market parties to worry about the implementation of the Sino-US trade agreement. Regarding Sino-US relations, he mentioned: “If China cannot implement the first phase agreement, new tariffs will be imposed. We will have to see in the future what will happen in terms of purchases due to the epidemic…”. On the morning of May 8, representatives from China and the United States called again and stated that they would work hard to create a favorable atmosphere and conditions for the implementation of the first phase of the China-US economic and trade agreement and promote positive results. It can be seen that the US’s intention to use constant pressure to promote China to accelerate the purchase of US agricultural products has not changed. In the follow-up, there are still variables in whether China and the United States can properly handle their differences and ensure the implementation of the agreement.
It is also understood that the spot price of US cotton in Qingdao Port is around 12,500 yuan/ton, which is less advantageous than other imported cotton prices of the same grade, and the actual digestion pace is slow. Therefore, whether China can continue to sign a large number of US cotton contracts in the future will be restricted by relevant factors such as the actual demand of domestic enterprises, the cost-effectiveness of US cotton, and the Sino-US trade agreement. </p
