China has agreed to buy 10 million metric tons of soybeans from the U.S. as optimism grows that the trade war between the two countries might be coming to a close. About $200 billion in additional tariffs were set to be levied by the U.S. on Friday (March 1), but President Donald Trump announced he won’t enact those additional tariffs due to trade talk progress.
The president tweeted Sunday that he thinks the two countries are on the verge of a deal, and he plans to meet soon with Chinese President Xi Jinping at Trump’s Mar-a-Lago Resort in Palm Beach, Fla.
The ongoing trade war has hit U.S. soybean producers hard. China, the largest soybean importer in the world, typically buys about 30 million metric tons of U.S. grown beans each season and bought 32 million metric tons in 2017, according to the United States Department of Agriculture. To this point in the growing season, about 26 million metric tons would have been sold in a typical year, but only about 7.6 million metric tons have been sold, according to USDA figures.
U.S. Agriculture Secretary Sonny Perdue announced Friday that the Chinese agreed to the latest soybean buy.
The U.S. season-average farm price forecast for soybeans is projected at $8.10 to $9.10 per bushel for the upcoming growing season, which is unchanged from previous forecasts, according to USDA. The soybean meal price is forecast at $295 to $335 per short ton, up $5 per ton. The soybean oil price forecast of 28.5 to 31.5-cents per pound is unchanged at the midpoint, the USDA report noted.
The global soybean outlook includes lower production, exports, crush, and stocks. Global soybean production is lowered 8.2 million tons to 361.0 million with lower crop production in Brazil, Argentina, Paraguay, Uruguay, and South Africa. Production for Brazil has been lowered 5 million tons to 117 million due to dryness in parts of the southern and center-western regions. Production for Argentina has been lowered by half a million tons to 55 million due to a reduction in harvested area that is partly offset by increased yields. Global soybean exports have been reduced 1.7 million tons to 154.4 million, the report noted.
Lower exports for Brazil, Uruguay, and Paraguay are partly offset by higher exports for Argentina. Global imports are also reduced mainly on a 2-million-ton reduction for China due to lower crush demand, the report states.