Two weeks ago, the U.S. and China completed a phase-one trade deal amid almost immediate doubts that Beijing’s commodity purchase pledges were achievable.

That was before a health crisis gripped the world’s second-largest economy, making it even tougher to see how the export sales that President Donald Trump said would make American farmers “so happy” will materialize.

Since then Chinese buyers have booked only modest amounts of U.S. soybeans, pork and cotton, according to government data. Sure, it’s early days and coronavirus is an ongoing emergency. Barges aren’t ordered, loaded and delivered that quickly anyway.

But markets are noticing the dearth of buying activity, wondering how big of a dent to demand the health scare will cause.

While the agreement granted grace periods of 10 days or more to sort out paperwork, traders are growing impatient to see the follow-through after China’s pledge the boost purchases of American agricultural supplies by $32 billion over two years from pre-trade war levels. The shopping list includes soybeans, grain, meat, cotton and dairy.

For those keeping score:

  • Futures prices for soybeans — historically the most valuable U.S. export to China — have slumped 4.4% in Chicago since the day before the deal was signed.
  • Hog prices — pork is the preferred red meat among Chinese consumers — are 4.9% lower over the same time period.
  • Cotton is down 1.4% since mid-January, after reaching an eight-month high two days before the China accord was signed.
  • U.S. wheat is little changed since the signing ceremony. China has indeed bought the grain, but from Australia, Canada and France as part of WTO quotas.

As the coronavirus spreads, slower economic growth and travel restrictions could limit the need for imports in China’s food pipeline. Beijing pushed for wording in the accord that ensured its purchases complied with both WTO rules and the laws of supply and demand — insulating it somewhat against unforeseen events like a demand shock.

“It is, above all, uncertainty about the effects of the increasingly widespread coronavirus and about the implementation of the Phase 1 deal agreed between the U.S. and China that is weighing on sentiment,” Commerzbank said about slumping agricultural markets in a report yesterday. “As yet, there have been no reports of any significant Chinese purchases in the U.S.”

Charting the Trade War

The U.S. and Kenya are expected to announce negotiations on a free-trade agreement next week, America’s first such deal with a sub-Saharan country. The Trump administration wants the accord to be a model for future pacts with other nations in the region, though Kenya said that any potential arrangement won’t replace the African Growth and Opportunity Act, which provides 39 sub-Saharan African countries duty-free access to the U.S. for about 6,500 products ranging from textiles to manufactured items. The U.S. currently has one FTA on the African continent — with Morocco.