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Trump Expected To Sign Phase One Of China Deal On Jan. 15

President Donald Trump announced on Dec. 31, via his official Twitter account, he has plans to sign the first phase of the trade deal with China on Wednesday, Jan. 15, at the White House. The first phase saw Washington agreeing to cancel some new tariffs and reduce rates for other duties while China has stated they would purchase more U.S. agricultural products.

In the President’s announcement, he stated high level representatives of China will be present, however when asked, the White House did not immediately respond to the inquiry on who will be present from China. The President also stated he will be traveling to Beijing at a later time in order to begin talks on the second phase of the deal.

Reaching an agreement with China has been a priority for the President ahead of his 2020 re-election campaign. The limited trade agreement was first made in principle on Dec. 13 and since then the two sides have been working together to determine the agreement’s language upon official signing. As of press time, no text of the deal has been released as both sides are working on translation. U.S. officials have stated a technical review will also be done before the final sign-off of the deal.

If everything falls into place after the signing, the pact will help revive U.S. agricultural exports to China. Over the past year and a half, agricultural export sales have fallen with China halting farm purchases. According to Commerce Department data, as reported by the Wall Street Journal, U.S. farm exports fell from as much as $25 billion in recent years to below $7 billion in the 12 months through May. Farm exports to China have begun to go up in recent months however still remain nearly 60 percent lower than their pre-trade war peak. On Dec. 13, U.S. trade Representative Robert Lighthizer stated that U.S. trade to China would increase by $200 billion over two years and the trade deficit will go down as a result of the deal.

The day prior to the Dec. 31 announcement, U.S. soybean futures rose to their highest price since June 2018 on the expectation that the initial trade deal would be signed. Most-active soybeans futures on the Chicago Board of Trade (CBOT) rose 11 cents to $9.52-1/2 a bushel, which is the highest price for a most-active contract since June 13, 2018, as reported by Successful Farming. Corn slipped 1-3/4 cents to $3.88-1/4 a bushel after reaching its highest price since Oct. 22, 2019. Wheat futures pulled back after the most-active contract reached its highest price since August 2018 at the CBOT.

The market had advanced recently on the hopes of China increasing their purchases and concerns about unfavorable crop weather reducing harvests in rival wheat exports such as Russia, Ukraine and Australia.

 

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