The threat of a US-China trade war is already having an impact on the price European food manufacturers are having to pay for soyabeans.
As The Grocer went to press, it was still unclear whether the US would continue with its intention to start charging tariffs on $34bn (£26bn) of Chinese goods on Friday, to which China had promised to retaliate in kind with tariffs on a list of US goods including pork and soyabeans.
However, the Chicago Board of Trade’s prices for soyabeans - which reflect US prices for the commodity - have already dropped by 16%-17% since the beginning of June, according to Rabobank’s head of agri commodity markets Stefan Vogel, with Chinese buyers starting to look elsewhere.
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“The key driver is the threat around the markets here in terms of China,” he says. “The crop conditions in the US look really good so there is also a concern the soyabean crop could be big, which has driven this very quick and hard price decline.”
China’s move away from the US market means it is now looking to source from South America. This has consequently driven up demand for the commodity from the region, which is also a key market for European buyers of soyabeans and soyameal.
“Prices have also increased within China because they need to pay for the higher prices out of South America and no one is voluntarily offering them beans out of the US,” says Vogel.
Although Europe could shift some of its demand to the US, it doesn’t produce enough volume to replace the 18-20 million tonnes of soyameal and 15 million tonnes of soyabeans Europe currently sources from South America.
“It will definitely have an impact. Everybody who buys soyabeans from South America will have to pay higher prices,” Vogel says.
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