Soybean prices rise to highest level this year after Trump’s announcement of increased purchases by China

Soybean prices soar to their highest this year after Trump surprised the market with a plan to increase sales to China.

Soybean prices jumped to their highest this year on Wednesday after President Donald Trump expressed optimism about the prospects of reaching a deal with China to purchase additional American soybeans.

However, whether these plans will materialize remains uncertain, raising uncertainty about the potential benefits for farmers and casting doubt on the sustainability of soybean price increases.

“However, it’s important to consider that China will still be able to source from whichever country proves most competitive,” said Darin Newsome, senior market analyst at Barchart, noting that soybean prices from Brazil are lower.

In a post on the website Truth Social on Wednesday, Trump said he had a “great” phone call with Chinese President Xi Jinping and that he was looking forward to his planned trip to China in April. He wrote that China “has committed to purchasing 25 million tons for next season!” referring to soybeans, and that Beijing would consider “increasing soybean purchases to 20 million tons for the current season.”

Soybean futures rose in mid-morning trading after Trump’s announcement, noted Arlan Suderman, chief commodity economist at StoneX.

According to Suderman, the 20 million metric tons of soybean purchases would be higher than the 12 million metric tons stipulated in China’s original soybean purchase agreement. He noted that these additional 8 million metric tons of soybeans for China have not been priced into the market and are equivalent to nearly 294 million bushels of additional sales to China that are currently not reflected in the balance sheet. The balance sheet tracks changes in supply and demand.

“Such purchases seem unlikely for many reasons, but the possibility cannot be ignored,” Suderman added. He explained that the U.S. does not have another 294 million bushels of soybeans available for export, especially if a robust biofuels program is expected to launch in the coming weeks. Soybeans are used in biofuel production.

Furthermore, U.S. soybean prices are already approximately 70 cents higher than Brazilian soybeans delivered to Chinese ports, so soybean processors “have no incentive to buy American soybeans,” Suderman noted.

Trump’s initial “handshake agreement” with President Xi Jinping called for the purchase of 12 million metric tons of U.S. soybeans in the current marketing year, followed by purchases of 25 million metric tons in each of the next three years, Suderman told MarketWatch via email. He said this contrasts with China’s historical purchases from the US, which ranged from 30 million to 35 million metric tons.

“Brazilian soybeans are simply cheaper,” so “it makes no economic sense for China to buy more US soybeans now.” — Arlan Suderman, StoneX

According to Suderman, China has been investing in Brazil’s agriculture and infrastructure for the past 20 years, and “Brazil could now supply China with all the grain it needs without receiving a single bushel from the United States.”

On Wednesday, benchmark rates for soybeans and corn shipped by barge to US Gulf Coast export terminals strengthened as potential new soybean demand from China led to a sharp rise in US soybean futures and farmers rushed to sell their stored crops, traders said.

According to barge industry sources, warmer weather is expected this weekend, which could help ease shipping delays that have caused congestion on the Illinois River.

However, barge freight rates remain elevated due to weather-related delays.

In February, soybean barges loaded in the Gulf of Mexico rose 1 cent to 111 cents versus March soybean futures on the Chicago Mercantile Exchange, while prices for March shipments rose 106 cents versus March futures.

FOB Gulf soybean offers for February-loaded vessels rose 1 cent to about 126 cents versus March futures, while offers for March delivery remained flat at about 130 cents versus futures. Soybean futures on the Chicago Mercantile Exchange reached a two-month high on Wednesday, according to traders, following comments from U.S. President Donald Trump that China is buying more American soybeans.

The most-active soybean contract (March) closed 26.5 cents higher at $10.92-3/4 per bushel.

Soybean oil futures continued their gains from the previous day, fueled by updated U.S. government recommendations on tax breaks for biofuels, the main source of soybean oil demand.

Soybean oil rose 1.17 cents to close at 55.66 cents per pound.

The U.S. Treasury Department released updated guidance on biofuel tax breaks on Tuesday, which was welcomed by traders as it provides clarity for biofuel producers.

Mar 26 Soybeans  closed at $10.92 1/4, up 26 1/2 cents,

Nearby Cash  was $10.27 3/4, up 26 1/4 cents,

May 26 Soybeans  closed at $11.04 3/4, up 27 1/2 cents,

Jul 26 Soybeans  closed at $11.16 3/4, up 26 1/4 cents,

Tags: prices, soybean