US soybean prices have started to recover amid hopes the country will find a resolution to its trade war with China.
Prices for US soybeans on the Chicago Board of Trade came under pressure last year after China imposed 25% tariffs on US soybean exports, which were worth $14bn.
However, the two nations negotiated a 90-day standstill-agreement at the G20 leaders’ meeting in Buenos Aires in December, and officials this week held three days of trade talks in Beijing in a bid to resolve the conflict.
With the US able to sell soybeans to China without tariffs during the 90-day standstill period and the market hopeful of an agreement, prices started to bounce back at the end of last year, says Stefan Vogel, global strategist for grains & oilseeds and head of agri-commodity markets at Rabobank.
“Since late December we have seen soybean, soybean meal and soya oil recover by 4%-5% in terms of pricing on the Chicago Board of Trade,” he says. “That is clearly all driven by the hope China will import more soybeans.”
In contrast, prices for Brazilian soybeans, which were “very high” in November and early December as China looked to source soybeans from outside the US, have “come under pressure heavily” since the standstill agreement was negotiated, he adds.
As The Grocer went to press, Chinese and US officials had concluded their trade talks in Beijing but the outcome had not yet been officially announced.
If the two countries find a resolution, there could be ”further increase in prices” for soybeans in 2019, said Vogel. “However, there is already a lot of good expectations priced in, so if the trade talks don’t yield positive results prices would move lower again from the levels we are at now,” he adds.
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