I think that we can all agree that China needs our soybeans, and when push comes to shove, they will pay whatever the market bares. However, China will not make an announcement to purchase unspecified, but substantial amount of US agriculture and then immediately place orders. Also, every farmer holding soybeans is going to use this initial bounce from the “cease fire” in the trade war as an opportunity to unload some of their stocks.
So, at this stage of the game, I’m not convinced that soybeans have more upside from here. We have a record size crop on top of another record size crop and most of our export sales have disappeared for now. I think the bottom is in for soybeans and that there is more long-term upside potential, but not until we see some real long-term commitment from China for fair trade agreements. This delay in upping the percentage of the tariffs allows China to come in over the first quarter of 2019 and meet their immediate need while allowing our farmers to unload some of their soy crop. That’s it. Nothing more has been achieved.
Soybeans Jan ’19 Daily chart