Analysts say China less likely to buy US soy after Supreme Court decision

By Heather Schlitz

Feb 20 (Reuters) - China may be less likely to follow through on another big purchase of U.S. soybeans that President Donald Trump has been touting for several weeks in the wake of the Supreme Court striking down Trump's sweeping tariffs, analysts said.

Most actively traded soybeans fell slightly on Friday morning after rallying 8.49% since February 4, when Trump said on Truth Social that China would buy an additional 8 million metric tons of soybeans.

"What Trump has been doing is trying to put China's feet to the coals, and now we're asking -- will this make China less likely to take delivery of the beans?" said Darin Fessler, senior hedge advisor at Lakefront Futures. "The U.S. is still more expensive than Brazil. Without China being forced, why would they want to buy U.S. beans?"

Even while U.S. soy was rallying, many analysts and traders had expressed skepticism that China would purchase such volumes.

China has already purchased 12 million metric tons of U.S. soybeans, fulfilling its end of a trade truce struck in October after it shunned U.S. soybeans for months last year. China's state buyer, Sinograin, held public auctions to make room for U.S. shipments despite expectations of a bumper soybean crop in Brazil that China could purchase for less.

Without tariffs as a stick, U.S. soybeans would struggle to compete against rival Brazil, where a huge harvest currently underway has made the South American country's soybeans far cheaper.

The justices ruled that Trump exceeded his authority by implementing tariffs under a law meant for use in national emergencies. The decision raised questions about whether or how the administration will pursue new tariffs through other legal strategies.

For the market players who closely monitor China, the world's biggest soybean importer, the decision has added more uncertainty to an already volatile market.

Traders said they would closely follow any new twists in tariff policy as well as signs that China will bend to Trump's will and make purchases of soybeans or continue to turn toward Brazil and Argentina, where China is not engaged in a trade war.

Farmers are facing down their fourth year in a row of low to negative profits, and farm income is expected to drop this year despite near-record government payouts. The U.S. Department of Agriculture has announced it will provide $11 billion in bridge payments to farmers, partly in response to disrupted access to export markets. Producers will be able to enroll in the program next week.

"The tariff hammer has been taken away from the president, but what tool is he going to be bringing out in the future to keep tariffs in place?" said Dan Basse, president of AgResource Company. "It certainly throws more cloudiness around the issue."