Both the U.S. and China have announced a temporary pause in tariffs for the next 90 days, and the deal is moving markets.
The announcement comes after a weekend of meetings in Switzerland, the Treasury Secretary, and the U.S. Trade Representative. China will reduce its tariffs from 125 percent to 10 percent. In return, the U.S. will lower tariffs on most Chinese goods from 145 percent to 30 percent.
The DOW, S&P, and NASDAQ futures are all up significantly this morning.
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China’s renewed purchases signal improving sorghum demand at a time when export markets are otherwise uneven. Meanwhile, agriculture groups across the U.S, Canada, and Mexico want to protect close trade relations.
Despite the need for swift action, many ag lawmakers and industry groups argue that farm aid alone will likely not be sufficient to help farmers without improved trade relations with China.
One trader said the products entering the U.S. are primarily grind and trim, noting that the volume and type of beef, on its own, should not cause a major disruption. However, he says fund traders are reacting heavily to headlines rather than market realities.
Shaun Haney, host of RealAg Radio, provides the latest insight into the timing, expectations, and broader considerations of the potential aid package, despite increasing exports to China.
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Removing the 40% duty sharply lowers U.S. beef import costs on beef, coffee, fertilizer and fruit, and restores Brazil’s competitiveness during a period of tight domestic supply.
Bangladesh recently pledged to purchase 700,000 tons of U.S. wheat and has also become a new buyer of American soybeans.
Urea and phosphate see the biggest price relief from tariff exemptions, but nitrogen markets remain tight, and spring demand will still dictate pricing momentum.
Firm live cow prices and shifting dairy-side culling suggest cull cow values may stay stronger than usual this winter despite weaker cow beef cutout trends.
