Soybean remains at the heart of the US-China trade war

South Africa’s maize harvest process is largely depended on the weather
July 10, 2018
wheat
South Africa’s wheat growing areas likely to receive rainfall
July 11, 2018

Soybean remains at the heart of the US-China trade war

  • Soybean remains at the heart of the US-China trade war, hence prices were under pressure on Friday on the back of the introduction of tariffs. For context, China is the world’s largest soybean consumer and heavily reliant on imports. The key underpinning factor behind the country’s appetite for soybeans is the growing demand for animal feed, which in turn has been stimulated by increases in the demand for high protein food. China is a leading market for US soybean exporters, therefore tariffs could negatively affect US farmers’ incomes.
  • The USDA forecasts China’s 2018/19 soybean imports at 103 million tonnes, which equates to 65 percent share of global imports. This is 6 percent higher than the previous season. In the 2017/18 season, the leading suppliers of soybeans to China were the US, Brazil, Argentina and Uruguay.
  • The Chinese demand is expected to shift towards South American countries in the next couple of months. Brazil is likely to be the biggest winner due to its large supplies. Brazil’s 2017/18 soybean production was at 119 million tonnes, which is 35 percent of global soybean production, and at par with the US harvest. The forecast for the 2018/19 production season point to percentage point increase to 120 million tonnes, according to data from the International Grains Council.
  • Overall, in the near-term, the US will probably boost its soybean exports to alternative destinations which could include Mexico, Netherlands, Japan, Spain and Indonesia, amongst others. These are not big soybean users, but they are amongst the top ten importers, according to data from Trade Map.
  • Back on our home soil, the harvest process for the 2017/18 soybean crop is towards completion. At the end of last month, about 94 percent of the estimated 1.6 million tonnes of production had already been delivered to commercial silos. An update for the week of 06 July 2018 will be released on Wednesday.

 

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