OMAHA (DTN) -- President Donald Trump's new trade framework with China should at least re-establish normal trade flow for U.S. soybean farmers for the next three years, but farmers still face high input costs that are also tied to tariffs on Chinese imports.

U.S. farmers should see minimum annual sales of 25 million metric tons (mmt) to China for three years, according to Treasury Secretary Scott Bessent's interview on Fox Business Network.

News of the deal with China led to a short-term upswing in soybean futures prices. January soybean futures rose 13 1/4 cents on Thursday, closing at $11.07 3/4. March soybeans were up 10 1/2 cents to $11.15 3/4.

Overall, though, the announcement of a Chinese trade truce did not lift broader markets. Corn and wheat closed down, while stock indexes such as the Dow Jones Industrial Average, Nasdaq and S&P 500 all ended the day lower.

SOYBEAN FARMERS STILL IN RED

Caleb Ragland, a soybean farmer from Magnolia, Kentucky, and current president of the American Soybean Association, said the "devil is in the details" when it comes to interpreting the scope of sales and trade relationships with China going forward.

"We've still got a lot of uncertainty and clarification to get through," Ragland said in an interview with DTN. "We want to be positive and hopeful, but we have got to trust but verify as well. A lot of this is still unanswered, unfortunately."

The enthusiasm about the announcement also doesn't negate the fact that soybean farmers are still projected to lose $109 per acre this year. As Ragland testified just Tuesday in a U.S. Senate Judiciary Committee hearing, the losses stem from high input costs as much as they do commodity prices.

"This framework is a very positive deal that could help us move back closer to a break-even number, but we still have major work to do to get our industry back to being profitable," Ragland told DTN. "It's a combination of market opportunities and getting our cost structure back in order."

Tariffs have added about 12% to the costs of various inputs, he said. "That may not seem like much, but that's a big chunk when you start multiplying the billions of dollars in inputs our industry uses."

DETAILS ON CHINA SALES

Bessent said China agreed to a "massive amount of agricultural purchases" and a "great purchase agreement for the next 3 1/2 years." China would buy a "minimum" of 25 mmt (918 million bushels) over the next three years. Bessent suggested the sales could go higher with the relationship between President Trump and Chinese President Xi Jinping. "After Xi agreed to the Phase One deal, he (Trump) called him (Xi) regularly and got him to buy more."

Bessent added, "Our great soybean farmers, who the Chinese used as political pawns -- that is off the table, and they should prosper in the years to come."

In the 2024-25 marketing year that ended Sept. 1, USDA reported China bought 22.5 mmt (826 mb) of soybeans. That was down from two years earlier, 2022-23, when China bought 31.4 mmt (1.15 billion bushels).

No official statements or details of the trade agreement were released Thursday by the White House, Treasury or the U.S. Trade Representative's Office.

Agriculture Secretary Brooke Rollins stated China would "remove unwarranted tariffs on most U.S. ag like soybeans, cotton, corn, wheat, chicken, dairy, pork, beef, and fruits and vegetables."

On social media, Trump repeated that China would buy "massive amounts of soybeans, sorghum and other farm products." Trump added, "our Farmers will be very happy! In fact, as I once said before my first Administration, Farmers should immediately go out and buy more land and larger tractors."

CHINA DETAILS

The Chinese Ministry of Commerce statement mentioned the two countries "reached consensus" when it comes to "expanding agricultural trade" and cooperating on fentanyl but did not go into any details.

The U.S. agreed to drop the 10% tariff on fentanyl, and a 24% "equitable" tariff imposed on Chinese goods will be suspended for another year. China agreed to "adjust its countermeasures" accordingly.

The Chinese statement also said the U.S. would suspend its 301 investigation into China's maritime and shipbuilding industries. That would suspend $46-per-ton port fees that the Trump administration had begun to impose on Chinese ships starting Oct. 14.

The U.S. will also suspend a rule on export controls that restricts exports for companies that have 50% ownership of certain foreign entities.

WHAT TO EXPECT IN TRADE

Bessent said China would immediately buy 12 mmt (440 mb) of soybeans between now and January.

Rhett Montgomery, DTN's lead analyst, said it will be interesting to see how China meets the goal of 25 mmt of soybeans for next year.

Ultimately, the market should settle into a normal pattern of China purchasing U.S. soybeans as prices decline heading into fall harvest to bridge the gap before the South American harvest in spring.

"There is probably more to learn about the fine details of the arrangement, but for now, I view it as, at the very least, offering some peace of mind that for the time being, there is at least a foundation of demand from the world's largest soybean buyer," Montgomery said.

Montgomery said he recognized some of the frustration that the soybean trade with China more or less ends up on par with previous years.

"With the growing demand for soybeans across the globe, including domestically, having average or slightly above-average business with China will be enough with the greater goal being that eventually, tariffs are eliminated to a point where the open market can again dictate trade," he said. Pointing to the soybean rally this week, Montgomery added, "The market seems to have deemed the deal as satisfactory as well."

HOW WILL THE TRADE DEAL AFFECT AID NEEDS?

Just two weeks ago, the American Farm Bureau Federation and National Farmers Union each wrote Trump and Congress stressing the need for an aid package. The Arkansas Legislature also pressed its congressional delegation to seek aid from the president.

Ragland said that need doesn't go away. Again, the challenge is as much the costs of inputs with grain prices where they are now. "Lord knows some relief is needed, because it's certainly the darkest economic times that I've experienced in my farming career," he said.

Rabobank analysts earlier this week also said input prices would continue to drag down the prospects for profitability, barring a major supply shock globally.

Zippy Duvall, president of the American Farm Bureau Federation, on Thursday did not address aid needs but said AFBF "is encouraged" by the commitment to import soybeans and sorghum.

"Trade disputes dealt a blow to farmers who have already been hit hard by high expenses and historically low commodity prices," Duvall said.

The China announcement, along with trade deals and frameworks in Cambodia, Malaysia, Thailand and Vietnam, are all positive developments, Duvall added.

"Expanding markets and restoring purchases by China will provide some certainty for farmers who are struggling just to hold on," Duvall said. "We appreciate the administration for listening to the needs of America's farmers. As additional details are made known, we look forward to evaluating how these agreements will benefit the U.S. farm economy."

In the meantime, Executive Government reported Thursday that USDA moved $13 billion from the Commodity Credit Corp. into a new fund, the "Farmers Support Program." Executive Government cited internal emails on spending data stating that the $13 billion would go to farmers for tariff relief.

SENATORS' MIXED REACTIONS

Sen. John Boozman, R-Ark., chairman of the Senate Agriculture Committee, said in a social media post, "Restoring this market is a welcome development and I will continue working with the administration to support producers in Arkansas and across the country."

Sen. Roger Marshall, R-Kan., posted an interview he did on Fox News Radio in which the senator was ecstatic over the deal. Marshall said the sales amounted to $15 billion a year in soybeans and $2 billion in sorghum. "So, big, big news. We're doing back flips back home."

At roughly 1 billion bushels in soybean sales, prices would need to rally more than $4 to hit that $15 billion valuation.

Sen. Pete Ricketts, R-Neb., suggested U.S. farmers and other key industries need to reduce their market dependence on China.

"Throughout his Asia trip, President Trump has secured great trade deals for America. Despite the president's deal with Communist China, we must continue to diversify our trading partners," Ricketts said. "We shouldn't be dependent on selling soybeans to Communist China. We also shouldn't rely on importing their critical minerals and pharmaceuticals. We must continue to diversify our markets, secure our supply chains, and protect our technology to end our reliance on Communist China. I am committed to working with the administration on these priorities."

More DTN coverage:

-- "Rabobank: Sticky Input Costs Likely Keep Farm Profits Under Pressure Through 2027," https://www.dtnpf.com/…

-- "Bessent: China Agrees to Buy Nearly 1 Billion Bushels of US Soybeans," https://www.dtnpf.com/…

-- "Senators Probe Market Power Behind Rising Seed and Fertilizer Costs," https://www.dtnpf.com/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

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