China has stopped buying soybeans from the United States (US). This is a result of the trade war between China and the US. The country now mainly imports its soybeans from Brazil. The prices for Brazilian soybeans are therefore at a historically high level.
Bloomberg reports that the Chinese deliberately do not buy soybeans from the US. However, the fact that Chinese traders are taking this step surprises the market. There was still hope that Chinese traders would wait for the tariffs to come into effect.
The uncertainty that prevails means that Chinese traders have already made this decision. US Commerce Secretary Wilbur Ross said the trade war is really hurting now starts to do. The situation is worrying because America is highly dependent on China (the world's largest importer) for the sale of soybeans.
US-China talks
Talks between China and the US will begin on Thursday, May 3, to improve the situation. The talks will mainly focus on what China will do about America's complaints about unfair trade practices. However, a Chinese government official warned that there will be no negotiations over key interests. “In the event of a trade war, we have a much greater ability to survive the fallout than the US.”
The consequences of the trade war are gradually becoming visible in prices. Additional demand for Brazilian soy has caused the price in the country to reach the third highest level in history. Brazil has just finished harvesting one record high soybean yield.
Low yield Argentina
The soybean price is quite low after the harvest. That is why the high price in Brazil is striking. The high price also has to do with the poor soybean harvest in Argentina. After a long period of drought in the country, rain has fallen just now, around harvest time. This hinders the harvest and reduces quality.