Friday, July 13, 2018

As China stops buying American soybeans, driving down their price, other importers snap up bargain beans

"China's retaliatory tariffs on U.S. soybeans, threatened for weeks and enacted Friday, have driven down prices and triggered a wave of bargain shopping by importers in other countries stocking up on cheap U.S. supplies, according to a Reuters analysis of government data," Karl Plume reports for Reuters.

China, which buys two-thirds of the world's soybean exports, bought an average of 60 percent of all U.S. soybeans over the past decade, but so far in 2018 has bought only 17 percent. Instead, China is buying mostly Brazilian soybeans. Meanwhile, U.S. soybeans prices have fallen 17 percent over the past six weeks to about $8.50 a bushel, their lowest price in almost a decade. That's triggered a 127 percent jump in advance purchases of the next U.S. soybean crop over last year's figures. 

One of those customers is Brazil, the world's top soybean exporter; it normally doesn't need U.S. soybeans but is buying them to use domestically (mostly in cooking oil and animal feed) so it can export more soybeans to China.

"The decline of China's purchases of U.S. soybeans and the jump in those from other countries amount to a collective bet against any swift resolution of the escalating trade war between the world's top two economies," Plume reports.

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