CHICAGO: Donald Trump is asking China to end its tariffs on American agriculture, news that should seemingly send a jolt through crop markets. But instead, traders are casting a sceptical eye.
The US president made his demand late Friday in a tweet, saying that he’s asked China to immediately remove all tariffs on US agriculture, including beef and pork, citing progress in trade talks between the two nations.
Crop traders said they want to see some confirmation of more Chinese buying or a final trade deal before getting too excited over the news.
“The markets are a little tired of some of the ups and downs and the eight or 12-hour news cycle of tweets,” Greg Grow, the director of agribusiness at Archer Financial Services in Chicago, said in a telephone interview Friday. “The market needs to see some confirmation of a deal getting done. If this is a confirmation, and we start to see agreements that are signed, we’ll see a positive reaction for prices.”
The latest announcement came after a disappointing week for crop bulls. In another late Friday tweet on Feb 22, Agriculture Secretary Sonny Perdue said more soybean purchases from China were coming.
But while Chinese buyers were said to be in the US market on Mar 1 asking for offers, traders familiar with the process said no deals have been done.
If China does end the tariffs, “that would obviously be beneficial for agriculture and a positive for the markets,” Grow said by telephone Friday.
Even if China were to accept removing the tariffs, it could come at the expense of the US giving in to some Chinese demand during the negotiations, said Alan Brugler, president of Brugler Marketing & Management in Omaha, Nebraska.
America’s farmers – part of the base that helped drive Donald Trump’s election victory – have been the unintended victims of many of the administration’s policies. After the trade war sparked declines for crop prices, the president rolled out aid payments to help soften that blow.
But in the meantime, demand for exports of soybeans and other farm products has remained weak.