CBOT wheat ends near unchanged as traders eye U.S.-China trade

Perdue Tweet

Perdue Tweet

Early previous year Trump admitted farmers would take a hit in the trade war, but he insisted that they would "understand".

Beijing slapped a 25 percent tariff on USA soybeans in retaliation, effectively shutting down US soybean exports to China, worth about $12 billion previous year.

USA agricultural trader Bunge reported a $125 million fourth quarter loss in the soybean market citing "factors related to China trade and demand". The U.S. used to export 77 percent of its sorghum to China, worth roughly $1 billion.

Robert Lighthizer, the USA trade representative, initially gave a deadline of March 1 for these talks, but Trump said Tuesday that this wasn't a "magical date".

The impact of the trade conflict was plain to see in the results of major agricultural trader Bunge, which bet big on Brazilian soybeans in light of the trade war's impact on USA exports.

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In the first 11 months of 2018, the USA trade deficit with China ($382 billion) was larger than it ever has been before in an entire year. The remaining $2.5 billion went to items such as cotton, wheat and corn. That includes things like pork, beef, dairy, nuts and fresh produce. While commodities such as gold, palladium, oil, and more promise to reach record high prices, the soybean situation is quite the opposite.

China is proposing that it could buy an additional $30 billion a year of US agricultural products including soybeans, corn and wheat as part of a possible trade deal being negotiated by the two countries, according to people with knowledge of the plan.

Chinese farm incomes have suffered in recent years with rising production and labor costs, high product inventory and cheaper imports from overseas. May wheat delivery added 0.75 cent, or 0.15 percent to close at 4.9175 dollars per bushel. The market's attention also was turned to US Department of Agriculture (USDA) planting estimates on Thursday. The rest of the domestic needs would be covered by imports. Imports from Brazil were 66.82 million tons, up 29.8 percent year on year and constituting 75.1 percent of the country's soybean imports. "Strategy is working. Show of good faith by the Chinese". When the data for December is available, the total for the year is likely to pass $400 billion.

This could be bad news for other trade partners. Argentina's main trading partner for raw soybeans is also China. China's grain imports are much smaller relative to those of oilseeds, but the trade relationships are still important for the individual suppliers.

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