A delegation of commodity importers from China signed agreements to buy 12.53 million tonnes of U.S. soybeans and 371 tonnes of U.S. beef and pork even as President Donald Trump warned about issuing trade sanctions against the country.
The total value of the combined soybean and meat deals was set at $5.012 billion by the U.S. Soybean Export Council. The beef deal came just weeks after China reopened its market to U.S. supplies after a 14-year ban.
But traders and analysts said the agreements from the world’s top buyer of soybeans provided little insight for the market, as final prices and shipment dates were not specified. The agreements added up to the second-largest on record between the two countries.
“They are meaningless,” said Charlie Sernatinger, global head of grain futures at ED&F Man Capital. “It is window dressing.”
The deals were signed as frame contracts, which are typically non-binding letters of intent to buy at a later date, without formal sales terms.
Terry Branstad, the newly appointed U.S. ambassador to China, had said that serving U.S. beef in the embassy was a goal of his.
Agriculture trade has been a bright spot in U.S.-China relations since Trump’s inauguration, unlike other areas.
Trump said on Thursday he was considering using quotas and tariffs to deal with the “big problem” of steel dumping from China and other countries.
Agriculture groups have raised concerns that countries seeking to retaliate against U.S.-imposed trade restrictions will target commodities such as soybeans and corn that U.S. farmers produce a surplus of.
“I think that is something that we should always be concerned about and thinking about,” said Jim Sutter, chief executive officer of the U.S. Soybean Export Council. “But I think agricultural trade hopefully will continue to be that stabilizing force.”
The record for a soybean frame contract was for 13.18 million tonnes signed in 2015. A year ago, Chinese buyers agreed to buy 4 million tonnes of soybeans.
The market shrugged off the news, which hit late in the trading day.
“I wouldn’t read anything into this,” said a U.S. soybean export trader who asked not to be named because he is not authorized to speak with media. “It’s photos and shaking hands. To me, contracts have dates and prices.”
The benchmark Chicago Board of Trade November soybean futures contract settled down 46-1/2 cents at $9.87-1/2 a bushel, just a penny above its session low. The 4.5 percent daily loss was the biggest for soybeans since July 7, 2016.
Thursday’s deals likely will not impact China’s import volume from the United States as importers will continue to buy based on need and price, said the export trader, who has attended signing agreements in the past.
Still, the gatherings bring together buyers and sellers, which builds business ties and can lead to future export agreements, he added.
The U.S. Agriculture Department expects China to import 93 million tonnes of soybeans in the 2017/18 marketing year, up from 89 million in 2016/17.
Total U.S. soybean exports are pegged at 58.51 million tonnes, up from 55.79 million tonnes a year earlier.