Thanks to a new agreement between President Trump and the Chinese government, American farmers might see a boost, with promises of tens of millions of tons heading their way. However, analysts are a bit skeptical, suggesting that the timing could be too late for this season’s crops.
Treasury Secretary Scott Bessent announced that China will buy 12 million tons of U.S. soybeans this season, and then 25 million tons annually for three years going forward.
This commitment surfaced after Trump and Xi Jinping met for the first time in six years during the Asia-Pacific Economic Cooperation meeting in South Korea, aiming to ease the ongoing trade tensions.
Bessent, an actual soybean grower, referred to the deal as a “reset,” adding that local farmers are “very happy” about the news.
That said, U.S. soybean prices took a hit on Thursday, as traders doubted whether shipments from China would be quick enough to prevent surplus crops from piling up before the South American harvest arrives next year.
Joseph Glauber from the International Food Policy Research Institute mentioned that China is likely to switch back to Brazilian beans in late winter or early spring when their own crops come in, hinting that the U.S. might only have a narrow window to fill new orders.
The analysts expressed concerns about how feasible it will be to uphold Beijing’s long-term commitments.
“I really can’t speak to whether the agreement can be enforced, as I haven’t seen the details,” Glauber, a former USDA official, noted.
While Bessent’s figure of 12 million tons likely only covers sales through January, the situation remains murky. Suderman from StoneX raised questions about whether this tonnage is genuinely new business or just a rehash of prior sales.
He highlighted that if the deal leads to only 6 million tons of new trade, the surplus might reach close to 500 million bushels by the end of the marketing year, pushing prices down further.
Glauber acknowledged that while the 12 million tons for 2025 could offer some relief, it’s still significantly below what would be considered normal trading levels.
“The target of 25 million tons for the years 2026 and 2027 aligns more closely with recent activities, but there’s still a notable decline compared to the previous five years,” he added.
Glauber pointed out that the timing of purchases will really matter.
“We’re still early in the marketing year,” he remarked, noting that farmers are hanging onto their grain, hoping for a solid agreement with China. They expect soybeans to begin hitting the market, especially as prices rise.
Under this new U.S.-China framework, Beijing also committed to lowering tariffs, halting restrictions on rare earth exports, and tightening controls over certain chemicals linked to fentanyl production.
The U.S. in turn agreed to reduce tariffs on Chinese products from 10% to 47%, putting on hold plans for additional tariffs.
This revival of soybean trade marks a shift from the months of tension that halted Chinese purchases, subsequently impacting U.S. agricultural exports. In August, China purchased a record 12.2 million tons of soybeans from Brazil, as reported by the Rosario Trade Commission.
As per analysts, China is expected to end the 2024-25 season with a temporary glut, with import totals surpassing 100 million tons.
The White House agreement appears to respond to mounting political pressure from agricultural states affected by the trade conflict.
Bessent, who has positioned himself as an advocate for rural producers, indicated that he’s “feeling the pain” as a farmer himself.
Experts remain cautiously optimistic about the new soybean agreement.
Suderman mentioned that China’s annual commitment of 25 million tons falls short of 58% of its pledges from the 2020 “Phase 1” deal, but there’s still a glimmer of hope, assuming compliance from Beijing.
He anticipates that the arrangement will allow China to significantly increase its reserves of U.S. soybeans while still relying on South American sources in the long term.
With Brazilian soybeans barred from entering China’s reserves, this presents a unique chance for China to boost its hoard.
Traders indicate that the ceasefire offers some relief as domestic processors take in more of the soybean yield amid rising biofuel demand.
The agreement additionally encompasses U.S. grain sorghum, with Agriculture Secretary Brooke Rollins referring to it as “a win for Plains farmers,” though tonnage details remain undisclosed.
The finalized text of the Trump-Xi agreement is due to be signed next week.
Glauber emphasized that traders should watch port inspections in the Gulf and the Pacific Northwest alongside weekly reports from the U.S. Department of Agriculture to gauge whether shipments are picking up. “That’s all assuming the current funding deadlock gets resolved.”
Trump described his meeting with Xi as a “12 out of 10,” and Bessent suggested that this framework would “restore balance” to agricultural markets.
