Trump’s call for China to “quadruple” soybean purchases signals new phase of trade war

US President Donald Trump has soybeans on his mind.

Late Sunday, Trump posted that he hopes "China will quickly quadruple its soybean orders."

• He further hinted that buying American beans could fix China's massive trade surplus with the US.

The problem: Beijing has spent the past year building the capacity to get by without US soybeans.

• That's involved ramping up South American supply (including recently booking two test cargoes of Argentine soymeal under a long-dormant market access agreement), boosting domestic output, shutting the door on tariff exemptions for US ag products, and even cutting soy use in livestock feed – among a host of other measures.

The approach has crushed demand:

• Chinese buyers still haven't booked any US soybeans from the upcoming US fall harvest, per USDA data.
• That's highly unusual – and if this week passes without any purchases, it would mark China's latest entry into the US soybean market since records began 26 years ago.

Get smart: Trump wouldn't be tweeting about soybeans at night if he weren't getting briefed on them by day.

• With the extension of the 90-day trade truce out of the way, Trump looks set to push for a splashy ag purchase agreement – much like the Phase I US-China trade deal in 2020.

Get smarter: Beijing might stage a couple of headline-grabbing purchases to please Trump.

• But top leaders have zero interest in returning to any significant level of dependence on the US for food security.

The upshot: Traders should moderate their optimism.

• There's no hope for a structural reset of the US-China soybean trade.