After the conclusion of the Trump-Xi meeting, US Treasury Secretary Scott Berstein announced on Thursday (October 30th) that China has agreed to purchase 12 million metric tons of soybeans this year. Experts noted that from a historical perspective, this figure is significant.
In a meeting between US President Trump and Chinese Communist Party leader Xi Jinping in South Korea on Thursday morning local time, the two sides once again agreed to extend the ceasefire in the trade war and reached a series of consensus, including China’s commitment to purchase American soybeans and other agricultural products.
Berstein stated on Thursday morning during an appearance on Fox Business Channel’s “Mornings with Maria” that China has agreed to purchase 12 million metric tons of American soybeans this season (until January next year) and has pledged to purchase 25 million metric tons annually for the next three years, as part of the US-China trade agreement.
The Treasury Secretary also mentioned that other Southeast Asian countries have agreed to purchase 19 million metric tons of US soybeans, but did not provide a specific timeline for those purchases.
Following this positive news, soybean futures prices recovered from an earlier decline of up to 2.2%, rising by 0.2% to $10.965 per bushel as of 8:41 am Chicago time.
Earlier, President Trump stated that after the Trump-Xi meeting, a broad trade agreement was reached where China would buy a “tremendous amount” of American soybeans. Trump mentioned that China would begin purchases immediately but did not provide further details.
According to Bloomberg, the 12 million metric ton procurement commitment for this year aligns with the predictions of many analysts. Due to record-high imports of soybeans from South America, China’s current demand for soybeans is not substantial. Brian Grete, Senior Grain and Livestock Analyst at Commstock, noted that from a historical perspective, this quantity is “quite significant.”
Grete further mentioned that the annual purchase volume of 25 million metric tons in the long term “basically restores to normal levels.” He stated that these details provide soybean growers and the market with “more insight into China’s demand and a sense of security.”
Until now this season, China had refrained from buying American soybeans, using American farmers as leverage in the trade war negotiations. Marty Richardson, a farmer from Missouri, expressed relief that the details of how much soybeans China would purchase have alleviated his previous frustration. “While not a massive number, it’s still a number,” he said.
According to data from the US Department of Agriculture, the US exported around 27 million metric tons of soybeans to China last year, which is still lower than the results during Trump’s first term in the trade war. After the “phase one” trade agreement in 2020, exports to China rebounded to 34.2 million metric tons.
Farmers and analysts will closely monitor the speed of goods transportation. Bloomberg reported on Wednesday that China has bought at least two shipments of US soybeans, marking the first purchases known for this season.
Randy Place, Senior Grain Analyst at Hightower Report, stated that President Trump’s remaining term allows him to ensure that Beijing continues to fulfill its commitments. “He still has a few years to ensure the Chinese fulfill their commitments this year, next year, or even the year after,” he said.
Andrew Philips, a farmer from Nebraska, also mentioned that recent increases in soybean prices due to the optimism surrounding the trade agreement have been encouraging. He said, “While profitability is still a ways off, it’s much better than before.”
He expressed hope that “they (Beijing) will keep their promises, and maybe there will be more progress in the future.”
Industry insiders are still seeking clarity on whether Beijing’s tariffs on American soybeans are still in effect. Angie Setzer, Co-Founder of Consus Ag Consulting, mentioned that unless the Chinese government provides some aid, these tariffs must be “practically zero” for Chinese companies to profitably process American soybeans.
In March this year, Beijing announced tariffs on a range of American agricultural products, including soybeans. During a press conference, when asked whether Beijing would reduce tariffs on American agricultural products, a spokesperson for the Chinese Ministry of Commerce did not directly answer the question.