New crop soybeans rallied 24 cents on Monday thanks to a social media post President Trump.
The President over the weekend posting this on his “Truth Social” site urging China to quadruple its soybean buys ahead of a key tariff truce deadline.
“This is also a way of substantially reducing China’s Trade Deficit with the USA. Rapid service will be provided. Thank you President XI.”
No Evidence of China Soybean Buys
However on Monday the market provided no evidence of commercial demand or Chinese purchases according to Dan Basse, president, Ag Resource Company.
“Well, I always say the cash market doesn’t lie, Michelle And I’m not finding any evidence of Chinese asking for offers much less making any purchases. So at the moment it seems to be a challenge by President Trump to the Chinese to say hey you need to buy more U.S. soybeans and and and see where that goes,” he says.
Deal or No Deal?
And Basse says the U.S. and China do not have at trade deal or framework.
“No there’s no deal at all. I believe this is a Trump challenge to the Chinese. In fact, Chinese media hasn’t even mentioned the the soybean tweet from the president. So if you talk to the Chinese, nothing there that I can find in terms of their saying yes, we did do something or no, we didn’t.”
President Leveraging Ahead of Tariff Truce Extension
Basse says it looked like the President was trying to leverage the negotiations ahead of the Aug. 12 deadline on the tariff truce, which he extended for another 90-days.
“Whether or not the Chinese then buy anything agricultural or goods in general during that extension will be watched carefully but the Chinese have told some of their of soy crushers and importers not to buy us so it means they’ve been very active down in South America whether that rhetoric changes we’ll probably know in the next couple of days.”
China Has Purchased No New Crop Soybeans From the U.S.
In fact, as of August 11 China had bought no U.S. new crop soybeans, putting exports at the lowest level since 2010. Even though U.S. soybean prices are well below Brazil.
“If we’re a dollar cheaper, you’d think they would come back our way. But nothing so far price is not a consideration. This is about geopolitics,” he explains.
And Basse says China is strategically using this as leverage in their trade negotiations, which could mean the U.S. misses its soybean export window as they’re covered through October.
“So, if the U.S. has an opportunity, it would be November, December, maybe some of January. That may get you up to something like imports of 11 to 14 million tons. But again, it’s not the kind of demand we’d like to see from China longer term,” he adds.
