A commodities economist says the U.S. and China trade summit didn’t have much new information for U.S. agriculture, and grain traders are disappointed.
“Trader expectations of concrete deals coming out of this, they didn’t see that,” says Arlan Suderman, StoneX Group.
U.S. Trade Representative Jamison Greer told Bloomberg in an interview that China has agreed to buy more than “double-digit billions” in ag products in the next three years. Suderman says that’s nothing new, and it would be easy for China to follow through on.
“However, it can mean 10 billion or it can mean 99 billion. That’s a big range with huge implications. I still expect to see some more ag business coming out of it. I don’t expect them to buy 25 million metric tons,” said Suderman. But he says the U.S. might not even have that many soybeans to sell, given the robust majestic biofuels market.
He was expecting China’s three-year soybean purchase commitment to get negotiated lower “in exchange for buying other commodities, perhaps that will come.”
Suderman says the only statement that came out of the summit was that soybeans have already been taken care of from last October’s agreement.
“The market needs to understand China is only going to buy our soybeans if forced to do so because of pure economics and nothing else beyond that.”
He says he’s interested to see if China is going to buy more U.S. corn or Dried Distillers Grains, and while the commodity markets aren’t expecting that, he’s awaiting more details.
“If that were to happen, it would create further tightening of the balance sheet for the next year and tightening the margin for errors should we have a weather problem along the way.”
Suderman says China has also temporarily approved the extension of export licenses for hundreds of U.S. facilities to export beef to China that expired last year. Within a few hours of approval, he says the licenses were shown as expired again, which means beef exports into China are a matter that’s likely still in discussion.
EDITOR’S TAKE:
Very good question from Mr. Suderman – is China really going to purchase more U.S. ag products and how much? The answer to these questions could propel soybean and corn markets higher or leave them struggling to gain traction. Also, the granting of licenses to export beef to China comes at a time when we don’t even have the ability to meet domestic demand and the Administration is considering how to increase imports to the U.S. to lower consumer prices. What to make of all this conjecture? Who really knows! The Chinese are notorious for overpromising and underdelivering on their agreements.
This is all well and good, we will keep a close eye on developments in the next few weeks to see how it plays out. In the meantime, farmers/ranchers are still going to be looking for those new or qualified used trucks and SUV’s you have on your lot. Make sure you have them displayed on AgTruckTrader.com® to attract the maximum amount of attention from farmers/ranchers in your area!
