Analysts Examine 'Phase One' Of US-China Trade Deal

Those in the agriculture sector are analyzing this week's 'phase one' signing of the US-China trade deal.

 

Jon Driedger is vice-president of LeftField Commodity Research.

 

"From an ag perspective, there had been some pretty lofty numbers thrown around about the volumes of ag purchases that China would make from the U.S.," he said. "I think there was probably some headscratching about whether those volumes would be realistic, since they exceeded anything that China had been purchasing previously. The actual deal that was signed had volumes that would be maybe described a little bit more realistic in terms of the amount of purchases but pretty sparse on the details."

 

Driedger commented on the prospect of moving U.S. soybeans back into China.

 

"It's such a big deal because China, they purchase pretty close to two-thirds of all of the world's soybeans that get exported," he said. "They really are, just overwhelming, the biggest and most important market. There was some disruption obviously with the U.S., so that weighed on soybean prices, both futures markets and cash prices. They had been purchasing some more soybeans here from the U.S. more recently and there's an element of goodwill purchases as part of the negotiations. I think that this would suggest that it becomes a little bit more normal in terms of their buying habits and patterns."