Today is 07/02/2020

Soybean market amid trade frictions

It seems that soybean market, no matter at home or abroad, has been covered with a sense of fear. US soybeans are moving lower after rushing to one-and-a-half-month high, and soybean meal futures are also trading sideways after one-week losses in row on the Dalian Commodity Exchange. Investors are trying to protect themselves from being hurt again by the protracted US-China trade spats.

Insiders predict that there will be nothing of more concern and power in the soybean market than the outcome from the fresh round of trade talks in early October. And certainly, the weather in South America is also a focus. 

In their visit to the US last week, China’s delegation canceled the farm tour, which triggered concerns among investors. But US soybeans inched lower just for one day and then quickly rebounded and Dalian Commodity Exchange was even immune to it. After all, news like this is no longer a surprise at all when talking of trade frictions. 

But it should also be contributed to the official denial made by China, and investors were in dilemma since China and the US had made many goodwill actions. 

Chinese importers on Monday bought 10 boatloads, or about 600,000 tonnes, of soybeans for shipment from U.S. Pacific Northwest export terminals from October to December.

The soybean deals were the largest among private Chinese importers since Beijing raised import tariffs by 25% on U.S. soybeans in July 2018 in retaliation for U.S. duties on Chinese goods. But market participants still describe it as goodwill purchases, for the deals are still far lower than the normal. 

There are still a hybrid of factors to come, USDA seasonal report, trade talks in October, as well as slow planting rate under a dry spell in Brazil.