US-China trade talks are making progress, with possible agreements on tariffs and soybean purchases. Some advancements have been reported in Malaysia, where a preliminary deal has been reached regarding fentanyl and tariffs on ship deliveries. People are eagerly awaiting a meeting between the US and Chinese presidents, which might reveal more details about the agreements. The US Treasury Secretary has noted that China might delay action on rare earths for a year, a development viewed positively.

China’s Soybean Purchases

The US Treasury Secretary also indicated that China is set to purchase a large amount of US soybeans, which could affect Brazil since China has been increasing its soybean imports from them recently. More details on the trade negotiations are expected during the presidential meeting. As US-China trade talks show the first real signs of progress since tensions began rising in early 2025, there is a noticeable shift in market sentiment. The S&P 500 has already risen over 2% this past week, encouraging traders to consider buying call options on broad market indices like the SPX to benefit from future positive news. However, due to the uncertain history of these talks, it’s prudent to employ defined-risk strategies like call spreads to minimize potential losses if the deal doesn’t happen. The CBOE Volatility Index (VIX) has dropped sharply to below 14, reflecting this new market optimism and making protective options more affordable. This situation presents a great opportunity to hedge against any negative surprises from the presidential meeting. Buying out-of-the-money November VIX call options is a cost-effective way to safeguard portfolios against sudden changes in market sentiment. In the currency markets, the Australian Dollar—often viewed as a gauge of Chinese economic health—has strengthened against the US Dollar, breaking above the key resistance level of 0.6800. This trend may continue if a deal is confirmed, suggesting long positions in AUD/USD through futures or options. A weakening US Dollar could also make shorting the USD/CNH pair an attractive strategy as the Yuan appreciates in response to positive news.

Trading Opportunities

China’s commitment to purchasing a “significant” amount of US soybeans is a clear trading signal, with initial orders possibly reaching up to 10 million metric tons. This marks a shift from recent years when Brazil dominated China’s soybean demand. We see opportunities in buying call options on soybean futures or the Teucrium Soybean Fund (SOYB) before the official announcement. Lastly, we should consider sector-specific investments based on the developments from the talks. The potential delay of action on rare earths could create challenges for producers, making put options on the VanEck Rare Earth ETF (REMX) a strategic move. On the other hand, positive news regarding tariffs on ship deliveries, which has already helped lift the Baltic Dry Index by 5% this month, may boost global shipping stocks, making call options on major carriers appealing. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now