The White House’s announcement that China is committed to buying 12 million metric tons (mmt) of soybeans in the current year and 25 mmt in each of the next three years was met with varying degrees of relief and reservation on Thursday.
“We have a deal that will provide at least some stability, as long as China lives up to it, says Arlan Suderman, chief commodities economist for StoneX Group.
He believes the deal will be particularly helpful to the U.S. soybean industry in the near-term.
“For one thing, because we’ve been building up our domestic infrastructure for biofuel production, our domestic demand base is much stronger now. So even stabilizing the business with China is a real positive,” Suderman told AgriTalk Host Chip Flory on Thursday morning.
Soybean markets were slightly higher on Thursday but well off highs after the announcement of the trade deal with China overnight.
Final Details Are Not Yet Fully Defined
The purchase of U.S. soybeans by China raises questions that aren’t yet fully answered.
For one, is the 12 mmt purchase entirely new business for 2025, or does the purchase take into consideration the 5.9 mmt China had already purchased earlier this year?
Suderman describes the distinction as carrying significant market implications.
If it’s 12 mmt of new business for this calendar year, that would help hit USDA’s target and help finish the year with ending stocks near 300 million bushels. “That isn’t burdensome by any means. It isn’t tight, but it does help support prices in the recent trading range,” Suderman notes.
USDA Deputy Secretary Stephen Vaden told Flory that the 12 mmt represents all new business for the 2025-26 marketing year. Vaden emphasizes that the numbers agreed to between the two trade partners for 2025 and the next three years represent minimum purchase amounts.
“This is a floor, not a ceiling,” Vaden says. “We see, particularly looking toward next year, the 25 mmt number as a number to build on. But at a minimum, the Chinese have agreed to purchase 25 mmt of our soybeans, and that is more than they purchased in 2024. It is more than they purchased in 2023 and represents a solid baseline of demand for our farmers to sell to China.”
Flory shared some additional details he learned about what farmers could expect yet this year.
“Sources tell me Chinese buyers are asking for Gulf bids on soybeans to ship in December of this year,” Flory says. “That’s a good thing. What we still don’t know is how much of the ’12 million tons this year’ still need to be purchased. The cash market will tell us that — watch bids on the Mississippi River and rails to the PNW. Bean basis should firm and barge rates are already starting to show more activity.”
As for the 25 mmt purchase China has signed on for each of the next three years, Suderman believes delivery will primarily take place during the September to January time frame.
“But if any of that gets pulled forward into the current marketing year that would start tightening things up, maybe give us some more rally opportunities, particularly if there are some weather scares mixed in either in Brazil or the United States,” he says.
Suderman digs into the U.S.-China trade deal in detail on AgriTalk, here:
A Glass Half Full or Half Empty?
Without all the details of the trade deal, Suderman offers what insights he does have from a “glass half empty or half full” perspective.
From a glass half empty perspective, he says the current figure of 12 mmt in calendar year 2025 is a disappointment compared with historical sales to China of 30 mmt to 35 mmt annually. The 25 mmt purchase for each of the next three years only brings sales to China back to levels seen two years ago, not the peak.
However, a glass half full view of the situation sheds a positive light on the U.S.'s increased domestic demand.
“We built up our domestic demand so much that we don’t need as much from China in order to consume what we produce and give us that demand base,” Suderman explains.
Either way, the deal is a net positive, Suderman says. He calculates the deal would total 87 mmt over four years, representing approximately 75 mmt more than what would have been achieved without it, especially considering China’s long-term strategy to reduce reliance on U.S. food commodity imports.
“The Trump administration probably sped that process up a bit, but that’s the direction we were moving in,” Suderman says. “I believe once Trump is out of office, their intention is fully to cut off the United States. But that does give us time now to build up that domestic demand base and be able to handle that.”
Market Implications and Political Undercurrents
The deal is expected to bring some supply uncertainty back into the equation due to increased demand, potentially stopping the shrink in the U.S. to China bean market, Flory says.
Suderman believes the trade deal could justify a shift of several million acres from corn to soybeans in the coming year, which would help farmers with their rotation plans and possibly help them address high input costs.
Regarding China’s adherence to the trade deal, Suderman offered a unique perspective on China’s motivation. He suggests President Xi Jinping’s decision to make a deal might stem from a perceived weakness in his power base during China’s recent Fourth Plenum meeting. The event, involving 270 top Communist Party officials, is a time when leadership changes and positions are assessed.
“People get demoted from positions or removed from office, new people put into positions, etc., and if President Xi thought that his support base was strong, I think he would have held up strong against Trump,” Suderman says.
His perspective is that Xi felt some weakness in his power base and was quick to make a deal with the Trump administration to calm the international waters in order to focus on his support base at home. That could mean good news for the U.S. and offer a potential layer of confidence that the latest trade agreement with the China might be honored.
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