Trade summits usually spark anticipation for big export deals, and the meetings planned for in Beijing this week are no exception. Soybean futures have plenty of upside if China loads up on U.S. soybeans after the get-together Thursday and Friday between Presidents Trump and Xi.
But hope could turn out to be hype, unless traders believe smiles from a photo opportunity means beans on boats — lots of them.
Assuming the summit takes place, which seems a bit more certain today, fallout could play out in myriad ways.
- A large announcement could trigger “buy the rumor, sell the fact” trading, sending prices lower.
- News could convince other foreign buyers to step up and secure supplies before the price train leaves the station for higher ground. Last-minute buying could shrink old crop inventories at the end of the marketing year in August, sending old crop-new crop spreads into the stratosphere in a good, old-fashioned squeeze.
- All or none of the above!
Still, whatever news breaks from Beijing won’t come in time to impact export forecasts in USDA’s May 12 World Agricultural Supply and Demand Estimates. The agency is loath to alter its official WASDE predictions before, and sometimes even after, facts emerge from summits.
The May WASDE features the agency’s first monthly forecasts for 2026-27 supply and demand, which could convince USDA to default to numbers published in February at its annual outlook conference. Those tables pegged exports at 1.7 billion bushels, about 160 million more than the estimate for 2025-26.
- My forecast model puts the top third of the targeted nearby futures selling range from this scenario at $12.20 to $13.20.
- That’s just above the $12.005 high November hit on May 4 and compares to the fall harvest low of $10.48.
- Add 200 million bushels of sales to China’s shopping cart and the target range jumps to $13.80 to $14.80, prompting a major rally.
Will China take delivery?
But just hitting USDA’s 1.7 billion target may require heavy lifting.
Through April China accumulated less than half the U.S. soybeans it bought during the previous marketing year. Cheap supplies from a big Brazilian crop took over the market this spring, even as U.S. growers made plans to ramp up their own seedings.
China is aging, with its population growing slowly or shrinking overall, dampening growth prospects and the need to import protein feeds. Customs data through March showed soybean imports down more than 8% from the previous year.
Another potential wild card to watch is the value of the Yuan currency. The Peoples Bank of China — the country's version of our Federal Reserve — intervened recently to keep the Yuan from strengthening too quickly against the dollar, but buyers there still have plenty of purchasing power.
Remember, too, that China is a double-edged sword for soybean growers. A big deal could help price prospects but could also give Beijing leverage in the Byzantine world of diplomacy that could come back to bite farmers in the long run.
It’s like landing a really big fish. It’s easy to grow complacent about marketing after a short-term success, only to panic if your whopper slips off the hook, or, worse yet, goes belly-up and begins to smell.
So, make sure you’re ready to deal with a wide range of outcomes after the trophy photos and official weigh-ins, including what’s you’re going to do with all of that fish.