Asian Trade Deals Could Lift Ag Outlook

OMAHA (DTN) -- Soybean farmers were among those on Sunday praising a trade framework announced by U.S. and Chinese leaders that could end China's freeze on buying U.S. agricultural products.

The U.S.-China framework was laid out on Sunday while Trump administration officials were holding talks in Malaysia. The administration also announced four smaller trade deals with Cambodia, Malaysia, Thailand and Vietnam -- all of which have provisions to open those markets to more U.S. food and agricultural products as well.

Treasury Secretary Scott Bessent made the rounds on Sunday news programs saying he thinks a trade "framework" has been negotiated to set up for President Donald Trump and Chinese President Xi Jinping who are set to meet Thursday in South Korea.

The news injects some optimism into commodity markets that have been suppressed in part because of the lack of export sales to China. The announcements could push prices back towards September highs, "at the very least," said DTN Lead Market Analyst Rhett Montgomery.

"From there, all eyes will be on Trump and Xi Thursday. It seems like the markets are ready and looking for a good reason to spark the post-harvest rally and this may be it," Montgomery said. "From there we will see what the fine details say regarding soybeans, but I still tend to think we don't necessarily need a huge commitment of volume from China to make the balance sheet interesting, just an elimination (or vast reduction) of the 23% tariff would immediately make U.S. beans the most affordable option for Chinese crushers. Of course, any volume commitment would likely be seen as extremely bullish in the short term to the soybean market, and traders may worry later if the goals are attainable or sustainable in the long run."

Bessent, on Face the Nation, was asked specifically about whether U.S. soybean farmers would be again selling soybeans to China. "I'm not going to give you the details here, but I can tell you that the soybean farmers are going to be extremely happy with this deal for this year and for the coming years," Bessent said.

Bessent added, "I believe we have brought the market back into equilibrium and I believe the Chinese will be making substantial purchases again."

SOYBEAN FARMERS WELCOME REPORTS

Kentucky farmer Caleb Ragland, president of the American Soybean Association (ASA), said fellow soybean farmers welcome reports that the two countries were prioritizing agricultural trade as part of their talks.

"ASA is encouraged by Secretary Bessent's comments that trade talks with China are productive and include U.S. soybeans. Signals of purchase commitments are a positive step, and we look forward to learning more details later this week," Ragland said. "We appreciate the White House and trade negotiators keeping U.S. soybeans at the center of discussions and are hopeful Thursday's meeting between President Trump and President Xi will result in a trade deal that delivers results for our farmers."

China's Ministry of Commerce posted an article from the state-owned media Xinhua, detailing the trade talks between U.S. and China officials. The report stated the two sides discussed "key trade and economic issues of mutual concern, including the U.S. Section 301 measures on China's maritime logistics and shipbuilding industries, the extension of the suspension period for reciprocal tariffs, fentanyl tariffs and law enforcement cooperation, agricultural product trade, and export controls. The two sides reached a basic consensus on arrangements to address their respective concerns."

The framework with China also comes just days after the U.S. Trade Representative's Office (USTR) announced it had launched another Section 301 investigation into China to determine whether China fully implemented its commitments under the 2020 Phase One Agreement. USTR stated its official export data shows China fell short of its purchase commitments. China had been expected to buy $40 billion a year in agricultural products, but peaked at about $38 billion in 2022.

DEALS WITH OTHER ASIAN COUNTRIES DETAILED

Along with the news on China, U.S. Trade Representative Jamieson Greer announced trade agreements with Malaysia and Cambodia as well as framework deals with Thailand and Vietnam.

All four deals included provisions to reduce tariffs and increase access to agricultural products, according to details released by the USTR office. Those details included agreements by Vietnam and Thailand to buy a combined $5.5 billion in agricultural goods.

Vietnam, which has a population of just under 102 million, reached terms to buy $2.9 billion in agricultural products. Vietnam also agreed to remove tariffs on almost all U.S. goods, including food and agricultural products. Vietnam also will address several non-tariff barriers that have affected the sale of goods ranging from cheeses and meats to fruits such as peaches.

Thailand, a country of 72 million people, agreed to purchase $2.6 billion in agricultural products, including "feed corn, soybean meal, and dried distiller grains with solubles," and eliminate tariffs on 99% of U.S. goods, including food and agricultural products. Thailand also agreed to issue import permits for U.S. ethanol, and allow U.S. safety standards for imports of meat and poultry.

Malaysia, a country of 34 million people, committed to "significant preferential market access for U.S. products," including "dairy, horticultural products, poultry, pork, rice and fuel ethanol," a fact sheet from USTR stated. Along with that, Malaysia also agreed to open up market access for U.S. sorghum. Malaysia also agreed to recognize U.S. food safety systems for meat, poultry and dairy products, along with halal certification and "adoption of regionalization approaches to facility U.S. exports of pork and poultry." Malaysia also committed to "groundbreaking provisions" that will maintain the use of common names for U.S. dairy and meat products.

Cambodia, which has roughly 18 million people, also agreed to eliminate tariffs on all U.S. products exported to the country. Cambodia agreed to "address and prevent barriers to U.S. agricultural exports" to the country by recognizing U.S. regulatory oversight and accepting certificates from U.S. authorities. Cambodia also agreed to eliminate geographical indicators for cheese and meat products.

Jed Bower, an Ohio farmer and president of the National Corn Growers Association, said the trade deals with the four Asian countries would create additional market opportunities for corn, ethanol and distiller dried grain with solubles (DDGS).

"This is all very good news for the nation's corn growers. Eliminating tariffs on ethanol exports to Malaysia and Cambodia will boost demand. We are encouraged to see that the framework for Thailand included agriculture purchases of corn and DDGS," Bowers said.

"The announced framework for Vietnam is also promising, as this is already a robust market for DDGS and corn growers are well positioned to supply corn and ethanol as well. We look forward to reviewing more details on the frameworks for Thailand and Vietnam. Corn growers have been calling for deals that will open new markets, and we applaud the Trump administration for listening and acting on our request," Bowers said.

Emily Skor, CEO of Growth Energy, said agriculture and rural communities need markets such as the deals struck under the four trade agreements.

"Global demand for ethanol is growing and the Trump administration continues to find ways to create new opportunities for this industry while positioning American producers to make the most of them," Skor said. "These new deals will be welcome news across the heartland, and we commend USTR for its commitment to building American energy dominance through the strength of our trade relationships."â?¯

Chris Clayton can be reached at Chris.Clayton@dtn.com

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