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China can fulfil $40 billion U.S. farm purchase pledge - consultancy

By Hallie Gu and Tom Daly
FILE PHOTO: A worker packs bottles of soybean oil made from imported U.S. soybeans at the plant of Liangyou Industry and Trade Co., Ltd in Qufu

By Hallie Gu and Tom Daly

BEIJING (Reuters) - China will make good on a pledge to purchase more than $40 billion (30.7 billion pounds) per year of U.S. agricultural products under the recently agreed Phase 1 trade deal between the two countries, China's top agriculture consultancy said on Friday.

Chinese purchases of agricultural goods are expected to increase to $40 billion to $50 billion (38 billion pounds) annually over the next two years under the deal aimed at resolving the long-running trade war between the world's top two economies, according to U.S. Trade Representative Robert Lighthizer.

The deal has yet to be signed, fuelling scepticism over whether China will be able to import such a large amount of U.S. farm products.

"Most foreign media don't believe that China can fulfil the commitments," Shanghai-based consultancy JCI wrote in a note. "But as a Chinese consultant company on (the) agricultural market, JCI strongly believe that China has the ability and will fulfil its promise."

JCI estimates China can buy a total of roughly $41.3 billion worth of U.S. farm products annually, including around $18.7 billion - or 45 million tonnes - of soybeans.

Soybeans have been hit heavily by Chinese tariffs on U.S. goods in the tit-for-tat trade row, hurting U.S. soy farmers who depend heavily on the Chinese market.

China's soybean imports from the United States last year halved from 2017 to 16.6 million tonnes, the lowest annual total since 2008.

JCI's projections were based on a "careful study" of China's import volume of U.S. farm products in the past and assume favourable weather and pricing throughout, said the company. It noted that China's U.S. soybean imports hit a record high of 33.66 million tonnes in 2016.

JCI expects another $2.1 billion will come from 1 million tonnes of frozen pork and offal imports, while sorghum, corn and distillers' grains imports will reach about $1.8 billion each. It did not include volumes bought for state reserves.

Wheat shipments will hit $1.4 billion, chicken feet imports will reach $1.1 billion - which would mark a 257% increase from the previous record - and nut purchases will rise to $2.5 billion, it said.

The biggest amount of nuts China ever bought from the United States was $391 million in 2012, according to U.S. export data.

(Reporting by Hallie Gu and Tom Daly; Additional reporting by Gavin Maguire; Editing by Susan Fenton)