Trump Urges China To Double US Soybean Purchases, Raising Prices
US President Donald Trump said he hopes China will significantly increase its purchases of American soybeans, comments that came a day before the trade truce expired.
“China is concerned about its soybean shortage,” Trump wrote on the Truth Social website on Monday. “I hope China will immediately double its soybean orders. This is also a way to substantially reduce China’s Trade Deficit with the US.” Trump also thanked Chinese leader Xi Jinping in the post, without explaining why.
The president’s push comes as US farmers are just weeks away from the next harvest, increasing the supply available for sale. China is the world’s largest buyer of the oilseed and typically ranks as the largest customer for American soybean farmers, a trade worth more than $12 billion by 2024.
However, US government data through the end of July shows the Asian nation has refrained from ordering any cargoes for the upcoming season, which begins in September, due to lingering tensions between the two sides.
Chicago soybean futures jumped as much as 2.8% after Trump's post, the biggest intraday gain in four months. Corn and wheat also traded higher. Agriculture has been a key issue in the trade dispute between the two sides, with China turning to crops from South America and elsewhere to meet its needs.
China agreed to increase purchases of US agricultural goods such as soybeans during the so-called phase one trade agreement reached during Trump's first term, although Beijing ultimately fell short of the pact's purchase targets. Trump's remarks sparked renewed optimism that bilateral trade between China and the US could soon recover, with assets such as Chinese equities also rising.
US soybean prices have also become cheaper than those shipped from Brazil as the influx of new supplies approaches.
Beijing faces an August 12 deadline for its tariff truce with the US to expire, although the Trump administration has signaled that the deadline is likely to be extended.
China has long been concerned about its supply of soybeans, a key element of the country's food and animal feed. The country has increased soybean purchases from its main supplier, Brazil, in recent months and is also testing a trial cargo of soybean meal from Argentina to secure supplies of the animal feed ingredient.
“The move to purchase Argentine soybean meal is just a temporary fix,” said Hanver Li, chief analyst at China-based commodities consultancy Shanghai JC Intelligence Co. “If the Sino-U.S. negotiations go well, it won’t become a long-term trade pattern.” English: This is typically the time of year when Chinese purchases begin to shift to the Northern Hemisphere. Analysts surveyed by Bloomberg expect the U.S. Department of Agriculture to upgrade its outlook for the domestic harvest in a report due Tuesday.
However, there is little sign that China is concerned about soybean shortages, despite Trump’s comments, said Vitor Pistoia, senior grains and oils analyst at Rabobank. If trade relations don’t improve, the country will be able to source its entire annual supply from South America if necessary, bypassing the U.S., he said.
“When you add what Brazil has, what Argentina has,” with what Uruguay and Paraguay have, “all of those countries have enough supply for China,” he said in an interview.
While China and the US have been trying to reach a trade deal, other issues have complicated their relationship. Last week, China defended its Russian oil imports, dismissing US threats to impose new tariffs after Washington imposed secondary levies on India for buying energy from Moscow. And on Sunday, a social media account affiliated with state-run China Central Television, which regularly signals Beijing’s thinking on trade, criticized alleged security vulnerabilities and inefficiencies in Nvidia Corp. chips. In July, the Trump administration reversed course by allowing Nvidia to sell its H20 AI accelerator to China. (alg)
Source: Bloomberg
