Commodity Blog

Soybean futures are trading relatively flat on Monday as reports that China might suspend US agricultural imports weigh on the overall commodities market. The soybean market had already been trading lower year-to-date, so any trade strife between the world’s two largest economies could impact American crops in the second half of 2020.

August soybean futures were unchanged at $8.4075 per bushel at 17:17 GMT on Monday on the Chicago Board of Trade (CBoT). Soybean prices squeaked out a weekly gain of about 1% last week, paring its YTD loss to around 12%.

Bloomberg reported on Monday that China has ordered state-run agricultural firms to pause buying American soybeans and other farming products. Chinese buyers have already canceled an unspecified number of soybean and pork products. Also, according to the report, Cocfo and Sinograin had submitted pricing inquiries for as many as 30 cargoes of US soybeans, but they never executed the transactions due to the newest mandate from Beijing.

Private importers have not been given the same request by the central government.

China’s situation with the US regarding soybeans has been complicated. On the one hand, Beijing has been striking up a lot of deals over the last month for the 2019–2020 and 2020–2021 marketing years. On the other, Chinese buyers have also been revving up acquisitions from Brazil – the South American country recently reported a record amount of exports to China. Plus, Premier Li Keqiang has reiterated the nation’s support for the phase-one trade agreement, noting that the nation intends to adhere to the provisions of the deal. However, first-quarter numbers indicate that it has fallen way short of the roughly $36 billion pledge in US crop acquisitions in 2020.

The business news network notes that China has employed this measure as a warning shot to the US over the federal government’s actions on the Hong Kong file. On Friday, President Donald Trump confirmed that he would slap sanctions on Chinese and Hong Kong officials if Beijing moves ahead with national security laws that bypass Hong Kong’s legislature.

Could this be the start of a renewed trade dispute or a new Cold War?

In other agricultural markets, July corn futures dipped $0.0225, or 0.69%, to $3.235 per pound. July wheat futures dropped $0.04, or 0.77%, to $5.1675 per bushel. July lean hog futures declined $1.80, or 3.16%, to $55.25 a pound.

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