Soybeans exploded nearly 5% on Thursday on the heels of a tweet by President Trump: “Just had a long and very good conversation with President Xi Jinping of China… with a heavy emphasis on Trade.”
While light on details, the President’s optimism spilled over into the soybean market that has been desperate for a resolution to the trade war with China. Prices rallied from a one-month low near $8.31 per bushel to over $8.88 on Friday morning, when rumors of a pending trade deal excited markets further.
Although those rumors appear to be unfounded, there is increasing hope that the U.S. will be able to sell soybeans to China soon without the threat of trade tariffs.
Meanwhile, soy prices in China collapsed, a sign that the Chinese were more confident that U.S. beans could reach them soon, alleviating the shortage faced by the world’s largest soybean consumer.
China previously bought almost one-third of all U.S. soybeans, but the Asian nation imposed tariffs on U.S. beans in response to President Trump’s tariffs against Chinese goods. For some farmers, selling soybeans to China again could make the difference between bankruptcy and hefty profits this season.