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US-China Trade Jitters Send Soybean Futures Sliding 1%

May 30, 2018 at 16:34 by Andrew Moran

Soybean futures have slipped more than 1% midweek as US-China trade are sending jitters throughout the agricultural commodities market. Despite Beijing renewing its purchases of US soybeans, farmers and investors are still concerned that the world’s second-largest economy may send its business elsewhere.

July soybean futures slid $0.105, or 1.02%, to $10.23 per bushel at 16:11 GMT on Wednesday on the US ICE Futures exchange. Soybean prices are up so far this year, but they have plunged more than 2% in May, and analysts warn the volatility might persist.

Soybeans and other commodities tumbled after the US government confirmed it will continue to adopt protectionist policies until the trade dispute with China concludes. On Tuesday, the White House announced that it would impose a 25% tariff on $50 billion worth of Chinese tech imports, though Treasury Secretary Steven Mnuchin recently said a trade war was put “on hold.”

China is the world’s biggest soybean importer and the top buyer of US sorghum.

US farmers are worried that Chinese demand for soybeans and other agricultural products will plummet in the coming months. Earlier this month, it was reported that the Chinese government is in the beginning stages of a five-year plan to increase to domestic production of soybeans. One aspect of the initiative is to extend subsidies to farmers in four provinces.

Experts note that soybean prices could be much lower if it were not for the trucker strikes in Brazil. Because of this, Brazil, which has not seen its soybean exports surge, cannot take advantage of the US-China situation.

According to Reuters, soybean exporters are mulling over a force majeure declaration on shipments. This is a clause that releases exporters from obligations because of events that are not within their control, such as a strike or geopolitical tensions.

Other farm markets were slumping midweek. July corn futures fell $0.0775, or 1.94%, to $3.929 per pound. July wheat futures dropped $0.155, or 2.89%, to $5.21 a bushel. July orange juice futures shed $0.073, or 4.3%, to $1.626 a pound.

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