When news broke about the Phase One trade deal between the U.S. and China, it made the soybean industry especially happy. A Bloomberg report says don’t forget about wheat, which could also be a big winner in the agreement.
Speculation is rising that China will work to fill its wheat-buying quota as part of the agreement. That will likely create new demand for wheat because China has failed to live up to its wheat-purchasing promises in the past. Soybean purchases are likely to be somewhat more limited because of the African Swine Fever outbreak across the country, which will lower typical demand levels.
If Chinese wheat purchases were to reach the quota mark of 9.6 million tons, that would represent a huge demand jump. In the six years prior to and up through 2017, buying has averaged less than 50 percent of that allotment. The timing could be good for U.S. farmers.
Tighter corn supplies in Brazil and wheat supplies in Russia, the world’s top wheat exporter, have made American grain more competitively priced in the world market. That’s already causing Chinese importers to begin to boost their purchase levels from the U.S.