(The Center Square) – For the past two months, China has been buying U.S. soybeans at a faster pace, according to reports.
That is the news farmers in Illinois have been hoping for since the signing of the Phase One Trade Agreement with China in February.
The agreement was a relief for Illinois farmers, who were anxious to resume major trading with their largest customer after the damage that the soybean market has suffered in the past two years due to the U.S. tariff battle with China.
In the Phase One agreement, the sales promised are aspirational rather than guaranteed, analyst Jonathan Coppess, of the University of Illinois, cautioned.
The Phase One agreement "left some real flexibility for China to make purchases or not, depending on market conditions and prices and so forth," Coppess said.
Reports of China making aggressive purchases in the past few weeks are a positive sign, Coppess said, but he is waiting for year-end numbers before evaluating what the recent sales mean.
Andrew Larson, of the Illinois Soybean Association, said he has been hearing anecdotal reports of increased Chinese purchases from Illinois farmers, which he takes as a good sign for fall sales.
Larson said China has made "tremendous bookings" for the shipping capacity of soybeans in recent weeks.
Bookings are indicators of intent to purchase, Larsen said, noting that it can be canceled, and they are not the same thing as purchased cargos of soybeans.
Larson agreed with Coppess that it is too early to tell if the vast Chinese purchases promised in the Phase One agreement will materialize by the end of the year.
He said he is hopeful that as more markets, including China, are reopening and recovering from COVID-19 economic damage, U.S. soybeans' demand will continue to grow.
Larson also said he is encouraged by interest in U.S. corn and soybean purchases from many other buyers in countries worldwide, including Taiwan, Vietnam and Indonesia.