Market viewpoint on agri-commodities: US-China soybean linkages

• In the context of the ongoing US-China trade dispute, with China threatening to place a 25 percent duty of US soybean, it is worth highlighting the strong linkages of these nations’ soybean markets. Firstly, China is the world’s leading importer of soybeans. The key underpinning factor behind the country’s appetite for soybeans is the growing demand from the animal feed industry. Secondly, China is the leading market for US soybean exports.

• China’s 2017/18 soybean imports could reach 97 million tonnes, according to data from the USDA. This equates to 64 percent share of global imports for that particular season. Moreover, it is a 4 percent uptick form the 2016/17 season. The leading suppliers of soybeans to China are typically the US, Brazil, Argentina and Uruguay.

• At the time of writing, it is unclear what the future holds regarding the US-China soybean trade relations. Suffice to say that the US remains an important player in the Chinese soybean market. Between 2001 and 2016, the US soybeans accounted for an average share of 41 percent of the Chinese soybean imports market (see Chart below).

• From the US perspective, China is an important market for soybean, accounting for an average share of 45 percent of all soybean exports in the period between 2001 and 2017, according to data from Trade Map. Over this period, the US exported an average annual volume of 31 million tonnes of soybeans to the world.

• In the near term, the impact of the ongoing trade US-China dispute will be limited to the local soybean market, with the exception of the influences through the Chicago soybean price volatility. South Africa remains a net importer of soybeans and products, but the key supplier is typically Argentina.

Chart: China’s soybean imports

Source: Trade Map, Agbiz Research 

Find full Agbiz Morning Market Viewpoint on Agri-Commodities in the attachment below.

Agbiz Morning Market Viewpoint on Agri-Commodities 10 April 2018