Buyers in China have purchased 340,000 metric tons of U.S. hard red winter wheat, and U.S. wheat leaders hope it will be the first of many.
Vince Peterson, president of U.S. Wheat Associates, the overseas marketing arm for the industry, called the purchase "significant," and the largest since China implemented retaliatory tariffs on U.S. wheat in March 2018.
The U.S. and Chinese governments reached a "Phase One" agreement on a trade deal in January.
The purchase falls under China’s 9.64 million metric ton tariff rate quota, or TRQ. China has agreed to work toward filling its TRQ for wheat imports. If the changes are implemented, and Chinese millers can respond to market signals, most of the TRQ should be used, Peterson said in a press release.
"U.S. wheat farmers are in a good position to help fill the TRQ given current export prices, relatively low freight rates and the ready supply of the wheat classes China needs," Peterson said.
"We're very hopeful that this is the start of a renewal of the long-term trade relationship," Steve Mercer, vice president of communications for U.S. Wheat, told the Capital Press.
China's purchases are for new crop, which means they won't be delivered until after May 31, Mercer said.
"The fact that they're purchasing is important," said Glen Squires, CEO of the Washington Grain Commission. "I think all classes will eventually start being able to be moved there."
The increased demand could help boost U.S. wheat prices, which have been declining due to large global supplies of wheat and corn and soybeans, which influence wheat prices, Squires said.
Hard red winter wheat is $5.96 to $6.06 per bushel, more depending on protein levels.
"If demand starts increasing, that will help support prices," Squires said. "How much increase on price — who knows?"
The commission has not specifically spoken to any buyers in China, Squires said. Several trade teams from China have been put on hold due to coronavirus concerns.
U.S. Wheat representatives serve the China market and are constantly in touch with customers.
"We're as well-prepared as we could be," Mercer said. "The table is very much set for greater sales, more sales, a more consistent sales pace."