Soybean prices are again hit in the United States after trade talks between the country and China have ended badly again. The threat from US President Donald Trump puts grain exports further in a precarious position.
The August soybean contract on the CBoT in Chicago is heading towards its expiration date. During week 31, this rate fell from $325 to a low of $310 per tonne. This means that the price level of soya is falling back to levels last reached in mid-May. About 1 year earlier the price was $15 to $20 per ton higher.
China stops imports
While China had announced that it would import agricultural products again, President Trump announced that he would set up a new tariff wall. The last $300 billion of Chinese goods will be taxed at 10%. Talks between the two countries stalled last week. On Monday morning, August 5, the Chinese government announced that it would stop importing all agricultural products from the United States.
Due to the depleted Chinese pig herd, the demand for livestock feed is also decreasing. As a result, Chinese soy stocks reach their highest level in 5 months. Inventories are expected to remain extremely high during the third quarter. Brazil is the major supplier of beans. The country exported 7,8 million tons of soy in July. This is the 3th largest amount ever this month. However, it is considerably less than 1 year ago, when more than 10 million tons were exported. The export level for 2019 is now 53,2 million tons. This is 3,3 million tons less than 1 year earlier.
More soy and corn
Thanks to the good growing conditions, arable farmers expect a good soy and corn harvest. Due to the good demand, arable farmers are sowing more of these crops. Analysts estimate that the soy area will increase by 2% to 36,8 million hectares. That's a record. Such an area is theoretically good for 125 million to 126 million tons of soy. The corn area is expected to increase by 4%. In Argentina, the corn harvest is almost complete and the winter wheat area is expanding slightly.
In the United States, it is less certain to say anything about the acreage of soy. All states have sown less soy this year due to the extremely late and wet season. On Monday, August 12, the USDA (the American Department of Agriculture) will release the first estimate of the corn and soy acreage. The market is eagerly awaiting this. In the short term, the soy market, and that of other feed raw materials, is negatively affected by international trade policy.
Corn crops in Europe
The (grain) maize crops in Europe are also not all in good shape. The French government agency France Agrimer has adjusted their crop assessment downwards to the lowest level since 2015. The second heat wave at the end of July is the cause of this. The corn crops are on average 1 week later than last year. Hot weather during the flowering period is bad for the grain filling. Corn in Germany is also struggling with heat and drought.