This week’s meeting between Presidents Trump and Xi largely lived up to expectations, we think.
High on the agenda, and one of the most closely watched trade topics, was soybeans. Since the onset of the US–China trade dispute during Trump’s second term, China has largely avoided buying US soybeans, sourcing instead from neighbouring Brazil. The shift drove US soybean prices sharply lower and created deep frustration among parts of Trump’s voter base.
The “deal in principle” announced this week offers a welcome step toward normalising trade relations and should give both commodity and equity markets a boost. Under the framework, China has agreed to purchase 12 mmt of US soybeans this season, followed by 25mmt each year, for the next three years. In reality, the deal doesn’t significantly expand Chinese buying beyond historical averages, and the 12 mmt target still falls short of export goals. That said, after months of stalemate, even modest progress is being welcomed.
The fine print is worth noting, as the deal hasn’t yet been formally signed, and key clauses such as “market condition” provisions could still allow China to adjust purchases if global prices shift.
The talks also yielded progress on other fronts: improved access to Chinese rare earths and tighter oversight of fentanyl exports, in exchange for reduced US tariffs on Chinese goods. It remains to be seen whether either side truly “won,” or if this is simply a reset toward a more functional relationship.
Meanwhile, canola prices in Winnipeg have firmed as soybean values improved and crude oil strengthened on the back of new sanctions against Russia. Greater clarity around US soybean sales should help stabilise canola markets, which have been volatile since China imposed anti-dumping tariffs on Canadian seed. While Chinese and Canadian officials have met to discuss agricultural trade, tensions remain high over Canada’s tariffs on Chinese EVs.
Elsewhere, China’s weather woes continue. Heavy rains that disrupted corn harvests are now delaying winter wheat sowing. Only about 80% of the intended wheat area has been planted, as extreme rainfall has kept fields too wet to work. In response, Beijing has launched a “60-day operation” to help farmers drain fields and complete planting. With the main seeding window closing in October, the remaining 20% of area faces a race against time — a flag worth watching.
Next week
It appears that some of the red flags that were seen as driving prices lower have been resolved. While conflict still rages in the Black Sea and finer points of recent trade deals are yet to be ironed out, it is hoped that as we head into our harvest, prices will find some stability.
This weeks commentary is more about macro-economics and geopolitics that anything directly wheat oriented. Having climbed to over 0.70USc, the AUD has tipped over in
The final harvest reports are in, with further updates likely to offer minimal changes. Western Australia has received the promised bumper crop, while receivals on
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Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
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Oilseed markets find support as US–China trade talks progress
High on the agenda, and one of the most closely watched trade topics, was soybeans. Since the onset of the US–China trade dispute during Trump’s second term, China has largely avoided buying US soybeans, sourcing instead from neighbouring Brazil. The shift drove US soybean prices sharply lower and created deep frustration among parts of Trump’s voter base.
The “deal in principle” announced this week offers a welcome step toward normalising trade relations and should give both commodity and equity markets a boost. Under the framework, China has agreed to purchase 12 mmt of US soybeans this season, followed by 25mmt each year, for the next three years. In reality, the deal doesn’t significantly expand Chinese buying beyond historical averages, and the 12 mmt target still falls short of export goals. That said, after months of stalemate, even modest progress is being welcomed.
The fine print is worth noting, as the deal hasn’t yet been formally signed, and key clauses such as “market condition” provisions could still allow China to adjust purchases if global prices shift.
The talks also yielded progress on other fronts: improved access to Chinese rare earths and tighter oversight of fentanyl exports, in exchange for reduced US tariffs on Chinese goods. It remains to be seen whether either side truly “won,” or if this is simply a reset toward a more functional relationship.
Meanwhile, canola prices in Winnipeg have firmed as soybean values improved and crude oil strengthened on the back of new sanctions against Russia. Greater clarity around US soybean sales should help stabilise canola markets, which have been volatile since China imposed anti-dumping tariffs on Canadian seed. While Chinese and Canadian officials have met to discuss agricultural trade, tensions remain high over Canada’s tariffs on Chinese EVs.
Elsewhere, China’s weather woes continue. Heavy rains that disrupted corn harvests are now delaying winter wheat sowing. Only about 80% of the intended wheat area has been planted, as extreme rainfall has kept fields too wet to work. In response, Beijing has launched a “60-day operation” to help farmers drain fields and complete planting. With the main seeding window closing in October, the remaining 20% of area faces a race against time — a flag worth watching.
Next week
It appears that some of the red flags that were seen as driving prices lower have been resolved. While conflict still rages in the Black Sea and finer points of recent trade deals are yet to be ironed out, it is hoped that as we head into our harvest, prices will find some stability.
Have any questions or comments?
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Sources: Reuters, Zaner Ag, Next Level Grain Marketing, Mecardo
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Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
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Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
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Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
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We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.