Xi-Trump summit could lead to farm deal, but China's soybean demand remains low

• China bought $12 billion in U.S. soybeans in 2024 before Trump's return, compared to only $4.5 billion for corn, sorghum, wheat, beef and poultry combined
• Markets await clarity on how China will fulfill last year's 25 million ton annual soybean commitment through 2028, with uncertainty about whether targets apply to calendar or crop years
• More than 20 U.S. business leaders, including Cargill's chair, will join Trump on the trip as agriculture remains one of the less contentious areas in bilateral relations

Summary

A potential U.S.-China farm deal may emerge from this week's Xi-Trump summit, though expectations for significant soybean purchases remain muted. While agriculture represents a less contentious area in bilateral relations, market observers anticipate deals focusing on corn, sorghum, milling wheat, beef, and poultry rather than soybeans.

Key Figures:

• China purchased approximately $4.5 billion in U.S. corn, sorghum, and wheat in 2024, compared to $12 billion in soybeans
• China's U.S. soybean reliance dropped from 41% in 2016 to 20% in 2024, and just 15% in recent data
• An October agreement committed China to buying 25 million metric tons of soybeans annually through 2028—the highest level since 2022

Market Dynamics:

Weak Chinese demand and cheaper Brazilian alternatives limit appetite for additional U.S. soybeans beyond existing commitments. However, any confirmed Chinese soybean purchases could lift Chicago soybean prices, currently near two-month highs on anticipation of increased buying.

Over 20 business leaders, including Cargill chair Brian Sikes, are accompanying Trump to the summit. The White House seeks larger agricultural purchase commitments, though specific product details remain unclear.

Implications:

The summit may yield incremental agricultural gains, but China's diversification away from U.S. farm goods since Trump's first term constrains deal scope. Markets await clarity on how China will fulfill the 25 million ton soybean commitment, including whether targets apply to calendar or crop years. Any new agreements would likely focus on products where Chinese demand remains stronger and less competitive with alternative suppliers.