The trade war between the US and China is affecting the soybean market to a great extent.
The export of American soy beans to China has been disturbed for a long time. Chinese state media report that the country has reduced the import of soybeans with 10 million tons. Other commodities such as rapeseed oil, sunflower seeds and palm seeds are higher in demand. China is the largest importer of soy beans and is responsible for about 60% of global trade. The United States department of Agriculture (USDA) projects that China will import ‘only’ 95 million tons of soybeans in the season 2018-19. Previously, it was projected that the Chinese will buy 103 million tons of US soy beans.
At the end of July, soybean prices rose in the United States, Argentina and Brazil. The price increases in these countries are almost equal to the increased Chinese import levies that were applied US soybeans. The soybean price index of the International Grains Council (IGC), a measure of the soy price in the world, stood at 192 points on 6 August. This is 0.5% higher than the soybean price index a week earlier.
The month of August is an important grow month for the soybean crop in the mid-west of the United States. The weather forecasts do not show any extremes in that region. In central America, the temperatures are above average, but rain is also expected. The USDA assessed the majority of the soybean crop (67%) in good to excellent condition. But the quality lags behind earlier expectations and that also will have an effect on price of soy.