US soybean futures have tumbled this week as America’s second-biggest crop got dragged into the looming trade war with China.
On Tuesday, the Trump administration revealed plans to impose a 25% tariff on 1,333 Chinese products, worth $50bn, in retaliation for alleged intellectual property theft by China.
Chinese authorities immediately responded by threatening to impose similar tariffs on 106 US goods worth $50bn last year, including soyabeans and other key agricultural goods such as beef and wheat.
This would be in addition to the tariffs on 128 US products - including pork - imposed by China last week after Trump revealed plans to add tariffs to Chinese steel and aluminium earlier in March.
According to Daniel Rooney, an analyst for AHDB Market Intelligence, US soyabean futures “fell sharply” following the news from Beijing. At closing on Tuesday, Chicago (May-18) futures stood at $381.36/t but by Wednesday midday the price had fallen by more than $17 to $363.82/t. As The Grocer went to press, they were nearing $370/t, having recovered slightly.
China’s foreign ministry spokesman, Geng Shuang, has stressed the tariffs will only be imposed if the US goes ahead with its measures, with the “door to negotiation always open” to US officials.
However, while China did not want a trade war, it was not afraid of taking “necessary measures to safeguard its legitimate and lawful rights and interests,” he added.
If China does impose tariffs on US soyabeans, it will put further pressure on Brazilian supplies, which are already under pressure following drought in Argentina, says Rooney.
“As such, while this news is pushing oilseed futures prices lower, the global impact is not yet fully clear.”
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