China’s renewed purchases of U.S. soybeans are alleviating some of the pressure on the American farm sector after a challenging year, though agricultural ETFs have not reacted strongly yet. Since early October, China booked just more than 1 million tons of U.S. soybeans-its biggest daily purchase in two years-after the trade truce signed last month between President Trump and Chinese leadership, according to Bloomberg.
The resumption of buying marks a significant course reversal since Beijing lifted tariffs on U.S. soybeans to 34% in April, reducing imports to almost zero and helping drive a record agricultural trade deficit. As welcome as this recent activity has been for farmers, ETF investors at least seem to be adopting a wait-and-see attitude about whether the improvement will extend into future months.
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A Gradual Normalization, Not A Market Surge
The investor caution reflects both the year’s volatility in U.S.-China trade relations and the structural lag inherent in commodity ETFs, which roll through futures contracts and hold diversified exposure across multiple crops.
Still, with China agreeing to buy at least 25 million metric tons of U.S. soybeans per year until 2028, conditions for the agricultural complex appear more predictable than they did earlier in the year. This should continue to set up a more constructive backdrop for funds tracking agricultural commodities, even if immediate performance has been muted.
Agricultural ETFs To Watch In A Stabilizing Trade Environment
Invesco Agriculture Commodity Strategy No K-1 ETF (NASDAQ:PDBA): An actively managed ETF with exposure to 11 commodities, including soybeans, corn, sugar, and cocoa. PDBA remains down 3% year to date and charges 75 bps in expense fees. So far this year, according to data aggregated by ETF Database, the fund has managed to pull in more than $30 million in inflows, despite the market weakness.
Teucrium Soybean ETF (NYSE:SOYB)
SOYB offers a pure-play reflection of soybean market movements, and the fund is higher by about 9% YTD. It charges a fees of 83 bps. The fund has garnered more than $15 million in inflows in tha past month, as U.S. and China were in the process of negotiation.
Outlook
As farm trade between the U.S. and China shows signs of easing, the sector enters a period of relative stability compared with earlier disruptions. While ETFs have not rallied sharply, the improved policy backdrop may encourage investors to revisit diversified agricultural exposure through instruments such as SOYB and PDBA, depending on their risk appetite and commodity views.
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