(Bloomberg) -- Agriculture markets are already showing some fatigue over Wednesday’s much-exalted signing of the U.S.-China trade deal.
Soybeans, cotton and hogs -- three of the main commodities expected to benefit the most from increased Chinese purchases -- were all trading with little enthusiasm. Some traders have expressed concern that the potential benefits of the trade truce are already priced in for commodities, especially as American supplies are pretty sizeable.
“We’re just seeing some buy-the-rumor, sell-the-fact,” Terry Reilly, senior commodity analyst at Futures International LLC, said by phone.
In an agreement signed Wednesday at the White House, China committed to importing at least $12.5 billion more agricultural goods this year than in 2017, rising to $19.5 billion next year. China will also “strive” to purchase an additional $5 billion a year in farm products. That could get total purchases next year toward the $50 billion mark.
But doubts have surfaced on whether China will meet that target, particularly since the two governments have said they will keep secret the purchase benchmarks for individual commodities. China hasn’t committed to specific tariff reductions under the agreement.
Still, there were some signs of early buying even before the deal was inked, albeit the purchases were rather small. On Wednesday, the U.S. Department of Agriculture confirmed a sale of 126,000 metric tons of American soybeans to China. Additionally, the first five U.S. containers of chicken feet to be imported to China in five years cleared customs in Shanghai on Tuesday.
Now the market’s already looking for real evidence that China will follow through on its pledges of more purchases, and in big amounts. It will take time for such evidence to emerge, and until then skepticism will reign, giving agriculture bulls little to cheer about.
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