Optimism seems to be growing for some in the trade truce with China. Our sources at Pro Farmer report trade chatter continues to focus on China buying 5 MMT of soybeans. They report most of the buying will come from state-run companies to refill depleted government reserves.
It's not just China possibly importing soybeans. The U.S. Soybean Export Council reports last week net sales for soybeans were 890,900 MMT. That's up 42% percent from the previous week, and nearly 85% higher than the previous 4-week average. The biggest increases were reported from Argentina and Indonesia.
Analysts say that while they're watching for concrete evidence China is back in the market, these sales may be an indication it's already having an impact. Bill Biedermann of Allendale, Inc. says, "We're getting some non-normal buyers taking advantage of the discount that we have and I think they're buying because they want to buy before China starts to buy because once they do, the discount will be gone in a heartbeat."
Biedermann says he thinks there's 8 to 11 MMT worth of opportunity left with China this season.
President Trump is continuing to remain optimistic about a deal with China. He tweeted out on Friday, "China talks are going very well!" Some investors are concerned following the arrest of the Chief Financial Officer of Huawei Technologies. She was arrested last weekend in Canada. She faces extradition to the United States on charges of trying to evade U.S. sanctions in Iran. White House Economic Advisor Larry Kudlow told CNBC he doesn't see this recent controversy spilling over into the trade talks between the two countries.
Earlier in the week, a Chinese government spokesman said Beijing would "immediately implement" terms of the tariff ceasefire with the U.S. and is "full of confidence" a trade agreement can be reached within 90 days. The Commerce Ministry spokesman said talks will start by focusing on trade in farm goods, energy, and cars.
When asked to confirm President Trump's statement earlier this week that China promised to immediately buy American goods, the spokesman said China will "immediately implement the consensus reached by the two sides on farm products, cars, and energy". President Trump agreed on Saturday to postpone U.S. tariff hikes for 90 days while the two sides negotiate.