China to buy US soybeans: AGCO CEO says farmer confidence is back

China will resume buying US soybeans (ZS=F) as part of the US–China trade agreement that President Trump and Chinese President Xi agreed upon.

AGCO (AGCO) CEO Eric Hansotia joins Market Catalysts to discuss what the trade deal means for US farmers.

To watch more expert insights and analysis on the latest market action, check out more Market Catalysts.

Video Transcript

00:00 Speaker A

And Eric, I got to ask you of course about that political environment, right? Because we just got um an agreement it looks like between the US and China for China to resume purchase of soy beans. We've talked to some um farmers here on Yahoo Finance who are really dismayed by the situation, by sort of that stoppage of purchases. So now that it seems to be opening up again, what does that mean for your customers and have you have you already seen any kind of uptick in orders?

00:46 Eric

Yeah, I haven't seen any uptick in orders yet over the last couple days, but we certainly see this as a net positive. There's two announcements that came out this week. Number one was the firming of the commitment of purchases from China of US soy beans largely. Um 25 million net metric tons. That's great. That's back to about normal levels of purchases. Um I think China had held off to create create leverage in the in the trade discussions. Um but it seems like they're back in the ball game. Now we need to see that firm up and have those purchases actually

01:23 Eric

happen. But there's a commitment of about 12 million metric tons yet this year. That's a great rate for the rest of the year. And then 25 for the next years after that. That's the number one thing that's going to give farmers confidence. Um in addition to that though, there was a commitment by the US government to provide more aid to farmers to help them with the issues that they've dealt with during the 2025 year. Um you know, farmers have really taken it on the chin by not only these purchases being down, but their costs going up. And so government support uh was announced uh that would be over 10 billion. So, uh those the combination of those two are certainly net positive for the US farmer.

02:04 Speaker A

Well, and you talked about the the sort of farm cycle bottoming, right? Um, what effect did that sort of pause on soybean purchases have? Did it extend it and make it worse and is it going to help sort of juice juice things out of it, be a catalyst to get out of it?

02:26 Eric

Yeah, let me give you a couple of numbers. The US large Ag equipment market was down 30% this year. Our production was down 50% because we were trying to take inventory out of the system. If you compare our production levels this year compared to two years ago, we're down over 70%. So, it's a dramatic drop off in North America, um partially because of the cycle, but turbocharged in a negative way because of the uncertainty and the lack of purchases from the number one consumer of of export grain and that's being the the China market. So all of this hit at the same time. It was a pretty dramatic impact on the US farmer. took their sentiment down.

03:13 Eric

Um, you know, the the average age of the fleet in the US is is getting older and so there's a thirst to buy. Um and I'm I'm hopeful now that with some of these indicators that came this week that that will bring confidence back into the to the US farmer.

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