Ramstad: What’s worse for farming, great weather or President Trump?

China has begun buying U.S. soybeans after President Xi’s pledge to President Trump, with the USDA confirming a purchase of 792,000 metric tons (about 7% of the 12 million metric tons Xi promised); soybean futures have risen roughly 10% to about $11.50/boz since the Oct. 30 meeting and briefly spiked 3% on the rumor before easing on the confirmed sale. The move signals a partial thaw in the U.S.-China trade dispute that had pressured Midwest producers, notably Minnesota, but does not resolve broader downward pressure on farm incomes. Prices for most crops are well below year-ago levels — sugar beets are down about 30% — as a large 2025 harvest, softer demand (including some pullback attributed to GLP-1 diet drugs) and increased imports have swollen supplies and pushed commodity prices lower.

Analysis

China has transitioned from rumor to confirmed buyer of U.S. soybeans after President Xi’s pledge, with the U.S. Department of Agriculture confirming a purchase of 792,000 metric tons—about 7% of the 12 million metric tons pledged—and soybean futures have risen roughly 10% to near $11.50 per bushel since the Oct. 30 meeting; an initial 3% intraday spike on the rumor gave way to price retracement when the sale was formally reported. The confirmed purchase signals a partial thaw in trade-related demand pressure for soybeans but is a limited execution of the pledged volume, leaving upside contingent on follow-up sales and sustained Chinese buying rather than a one-off transaction. Broader agricultural markets remain under strain: prices for corn, wheat and most oilseeds are below year-ago levels and sugar beets are cited as roughly 30% lower year-over-year, with the article attributing weaker sugar demand in part to GLP-1 driven dietary changes and increased imports. A strong 2025 harvest increased supplies, which, combined with softer demand trends, maintains downside risk to farm income absent persistent export recovery.

Key Decisions for Investors

• Consider modest, tactical exposure to soybeans (e.g., SOYB or nearby futures) to capture upside from confirmed Chinese buying while keeping position sizes small given the purchase represents only ~7% of the pledged 12M metric tons
• Underweight or hedge broader agricultural allocations (corn, wheat, sugar/sugar-beet linked exposures) due to documented price weakness across crops and a large 2025 harvest that is suppressing farm income
• Monitor USDA weekly export sales and any repeat Chinese purchases against the 12M mt pledge as primary catalysts before increasing exposure, and watch reported demand signals such as sustained import flows
• Use options or other short-dated hedges to protect positions from near-term volatility if subsequent export confirmations do not materialize or if supply-side pressure persists