The prospect of China quickly resuming purchases of American soybeans has fueled a rally in Chicago futures. But leading U.S. grain traders and lenders are skeptical, reports Bloomberg.
Even if the 90-day truce enticed Chinese buyers back to the market today, the 25% retaliatory tariff is still in place, making U.S. supplies less attractive.
"My biggest concern going forward is that at the end of the 90 days, we don’t have anything different," said William Secor, an economist at CoBank old the Country Elevator Conference in St. Louis this week.
Traders are skeptical. China usually buys soybeans about three months ahead and by then South American harvests will have started, according to Dave Baudler, managing director of North America grain at Cargill. Higher prices in Brazil will mean a "massive" expansion in plantings there, Bank of America Merrill Lynch analysts said in a report.
Read the full report at Bloomberg.