Soyabean prices bounced back on Tuesday as traders continued to weigh the prospect of the US and China reaching a trade war truce at the G20 summit later this week. Prices for the foodstuff fell on Monday by the most in five weeks and to their lowest since early November after US President Donald Trump said in an interview he would push through plans for new tariffs on $267bn of tariffs on Chinese imports if he and Xi Jinping, his counterpart in Beijing, could not agree a deal on trade. But traders are also grappling with other forces affecting demand and supply, namely an outbreak in China of African swine fever that is taking its toll on the country’s pig industry, which is a major consumer of soyabeans.
Crushed soyabeans are one of the most economical sources of protein for livestock, and demand for the foodstuff has been underpinned by the Chinese middle class’s growing appetite for meat, particularly pork. China’s National Grain and Oils Information Center thinks the country’s import demand for soyabeans will decline for the first time since 2011 as a result of African swine fever, analysts at Rabobank noted this week. (Tariffs on soyabeans are not much help either.)
The centre estimates imports will total about 90m tonnes this year, down from 96m tonnes in 2017.Recent customs data showed China imported 6.92m tonnes of soyabeans during October, which was down 14 per cent month on month. Rabobank added, however, that “as of yet, trade tariffs on US soyabeans seem to be having little impact on total Chinese soyabean imports, with year-to-date imports standing at 76.93m tonnes, down just 0.5 per cent year-on-year.”
China’s efforts to dial down its reliance on US soyabeans amid the trade war have prompted it to seek alternative sources of supply from Brazil, Canada and Russia. The departure of that major buyer has combined with expectations of a record US crop this year to weigh on prices, which are down 18 per cent from their year high in February. On Tuesday, the front-month contract for soyabeans was up 1.6 per cent at $8.76 a bushel. Prices have been range bound between $8.20 and $9 since mid-June. Source: