Soybean futures in Chicago advanced as the dollar extended declines and President Donald Trump stopped short of spelling out tough new sanctions against China over Hong Kong and kept the phase one trade deal with Beijing intact. Corn increased, while wheat snapped two days of gains.
The Bloomberg Dollar Spot Index tumbled to the weakest in more than two months, making U.S. exports cheaper for foreign buyers. While Trump’s speech on Friday was heated in rhetoric, it lacked specifics around measures that would directly impact Hong Kong, and there was no unraveling of the trade deal signed in January, when China committed to increase U.S. farm purchases.
Still, the target for China’s agricultural purchases is becoming untenable. The country bought just $3.35 billion of American agricultural products in the first three months of the year, the lowest for that period since 2007, according to data from the U.S. Department of Agriculture. That’s a fraction of the $36.5 billion it promised for 2020 under the January deal.
China has been turning more to Brazilian soybean supplies for later in the year. Premiums in Brazil jumped last month as trade tensions between China and the U.S. fueled speculation the South American country will take market share from North American growers even as its beans get more expensive.
(Source Bloomberg)