Trump vows 'very big' ag benefits from trade truce, but few Iowa farm leaders expect export bump

A new U.S.-China trade truce is welcome news, say Iowa farm leaders, but few expect to see an immediate bump in soybean or pork exports to Beijing despite assurances from China that it will purchase "a very substantial" amount of American goods.

"Any positive news is good," said Kirk Leeds, CEO of the Iowa Soybean Association, about President Donald Trump's meeting with Chinese President Xi Jinping during the Group of 20summit in Argentina over the weekend.

"That meeting could have gone the other way – it could have turned into a meeting they walked out of without issuing a joint statement," Leeds said. "The fact that there was clearly a positive conversation is reason to be optimistic."

Trump and Xi reached a trade cease-fire agreement that will give negotiators 90 days to start structuring a new trade pact.

During that time, the U.S. will halt plans to increase tariffs on $200 billion in Chinese goods to 25 percent, and China will purchase "a very substantial amount of American agriculture, energy and industrial goods" to cut the trade imbalance between the countries, the White House said.

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The goods include soybeans, beef, oranges, pistachios and red wine – but not pork.

The president said the deal will "have an incredibly positive impact on ...  every type of product."

"Farmers will be a a very BIG and FAST beneficiary of our deal with China," Trump tweeted Monday. "They intend to start purchasing agricultural product immediately. We make the finest and cleanest product in the World, and that is what China wants. Farmers, I LOVE YOU!"

The price for soybeans slated for January 2019 delivery climbed 6 cents Tuesday, following a rise of 11 cents Monday, showing a muted reaction to the news.

"The markets aren't overly excited. They're like most of us in thinking, 'Yes, it's positive, but there are very few details,'" Leeds said, noting the Chinese media hadn't reported Monday that the country plans to make any substantial purchases.

Dermot Hayes, an Iowa State University economist, said private Chinese buyers are unlikely to buy U.S. farm goods that are more expensive when compared with their global competition.

"Maybe the Chinese government will make the purchases," Hayes said.

If China does begin buying U.S. soybeans soon, it could help alleviate farm fears that America could lose a substantial portion of the Chinese market, said Sen. Chuck Grassley, R-Iowa.

"That would probably re-establish our markets, so the long-term problems that soybean producers thought we'd have maybe won't be as serious," Grassley said.

"I won't say that we haven't lost some markets, but that loss would be greatly diminished" with a trade resolution, he said.

"We don't have to have one gigantic agreement settled in 90 days, but we do need a show of good-faith progress," Grassley said.

Leaders at the G20 meeting also signed the U.S.-Mexico-Canada Agreement, which would replace the existing North American Free Trade Agreement, but it still must be ratified by those countries' leaders.

Grassley said that might be difficult, given a Democratic-led U.S. House next year.

The president said he plans to cancel the existing NAFTA pact to pressure Congress to approve the new agreement.

Without an agreement, the countries will revert to the high tariffs in place before NAFTA, Grassley said. "I don't think the Democrats will want to do that."

Pat McGonegle, CEO of the Iowa Pork Producers Association, said it's critical the U.S. get a new agreement with Mexico and Canada.

Mexico was the U.S.'s top pork market last year, importing $1.5 billion. "We still have a 20 percent duty into Mexico of 20 percent, so that's obviously having an impact," he said.