President Donald Trump and Chinese President Xi Jinping are scheduled to meet in Beijing on March 14 and 15. Jerry Gulke, a market analyst and founder of the Gulke Group, talked about what the meeting will likely mean for the soybean market.
“Apparently, we’re anticipating good news, and we haven’t heard about that eight million that Trump would like to sell. We’re behind about eight to 10 million on normal exports. So, a person could assume that the market is thinking that something good’s going to come out of the meeting. However, I remember the Phase One meeting that they had back when Trump won his first term, and everybody’s excited about that, but in that framework that we had and signed, there was a phrase in there that China agreed to buy X amount of dollars’ worth of goods.”
While there was a Phase One agreement, it might not have been what the U.S. really needed.
“They said, ‘Yes, we’ll buy your beans if they’re competitive, and we’ll buy them if we need them, but we won’t throw our new friends under the bus,’ meaning Brazil, where they’ve spent a lot of money on their infrastructure. So, the key I looked at was, well, what changed? Nothing really changed. Back then, they said that they would buy it if we were competitive and if they needed them. So now, we don’t even have an agreement for the framework that was done back in October and November, and now we’re looking at another meeting, and I’m afraid, or I’m concerned, that reality might not be as positive as the hype.”
Gulke wants to hear more about specific amounts of bushels that China intends to purchase, rather than dollar amounts.
“They could very well talk about bushels, which will be positive, because the framework in November, Trump negotiated that framework deal and talked about 12 million metric tons this marketing season, which they complied with, and then another 25 million thereafter, for the next two years. He’s talking bushels this time, and that’s what we really want to see happen, is we want to see these bushels leave, whether it’s corn or soybeans or sorghum, get them out of this country and not talk so much about dollars.”