China announced that they will restart importing American farm products after the United States agreed for a trade truce. The change in the relationship of the two countries creates a promising environment for both countries market and industries especially in agriculture since China is one of United States' biggest importers of farm products. Soybean export is expected to lead the countries agriculture as China's market starts running.
President Donald Trump and President Xi Jinping agreed to take a break in introducing new tariffs to one another. The two economic giants also agreed to intensify talks on trade policies. After the announcement, oilseed price jumped by about 3.2 percent in Chicago. It is the crop's highest jump since June. Prices of corn and wheat also increased significantly. Chinese soybean, however, fell because of the flooding supply in the Chinese Market.
Monica Tu, an analyst at researcher Shanghai JC Intelligence Co., said that the price in Chicago soybeans and the fall of Dalian is a normal market reaction to the U.S. -China trade truce because China has agreed to start buying agricultural products immediately. She, however, said that the market is still very concerned about the outcome of further negotiations and the certainty that there will be big purchases in the next few weeks.
It is, however, uncertain whether the price trend will continue since it is dependent on how fast the shipments of agricultural products resumes and given that it will demand higher prices in the Chinese market because of the tariffs long been implemented. Also, it is not yet clear whether China's import of agriculture products will materialize since it was never mentioned in the country's statement the White House, however, claims that China will immediately start buying farm products from the United States.
According to the White House, China pledged to buy "a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other products in exchange for the tariff pause.
China and the United States highlighted different outcomes of the high-stakes meeting which indicates that the trade negotiations between the two countries still need to be intensified. The United States announced the list of things that they had agreed with China in exchange for a 90-day recess in implementing additional tariffs on Chinese goods. China, on the other hand, highlighted the importance of the broad reduction in trade tensions.
