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Economist: China’s politics, not prices, driving U.S. ag purchases

The chief commodities economist with StoneX Group says he’s recently become more optimistic about China buying more ag products from the United States.

Arlan Suderman tells Brownfield President Xi Jinping is dealing with internal Chinese politics and he needs U.S. support.

“My bias at this point is he will survive it, but in the meantime, he’s going to be willing to do things that don’t make economic sense, like buying U.S. soybeans when Brazilian beans are cheaper.”

In a social media post earlier this month, President Trump said China might buy more ag products, including 8 million metric tons more soybeans from the United States in the current marketing year. That news helped boost soybean prices.

President Trump recently said he plans to meet with China again at the end of March. And Suderman says that could be a sign the two countries are close to an agreement, and while the details matter, the deal doesn’t have to be signed for China to buy.

“Because of President Xi’s problems at home, he wants to get along with the United States right now so he bought the 12 million metric tons of soybeans,” says Suderman. “He’s been buying a lot of grain sorghum, he’s bought some wheat and other commodities.”

Suderman also says the recent ruling from the U.S. Supreme Court on tariffs shouldn’t impact the U.S. and China trade agreement in the near-term, but it could affect the longer-term trade strategy.

“It means President Trump can’t just quickly respond with 100 percent tariffs against China if they try to cut off rare earth minerals like he did in October, which got them to back down.”

Suderman says tariff-priced economic reasons haven’t been behind China’s decision to buy U.S. ag products.