Are soybeans on the rebound?
With Alex Surmacz
Soybeans dominated the headlines in summer of 2018 as one of America’s first casualties in the US-China trade war.
China was the second largest buyer of US agricultural exports in 2017. But, as a result of trade tensions, it fell to fifth place by the end of 2018. This hurt a variety of US farmers, but damaged soybeans in particular. Total US soybean exports dropped by roughly 70 percent.
REtaliation hits US Soybeans
More recently, the news started to look a little better. Beijing announced that it would renew soybean purchases as trade takes with Washington began anew.
We’ve seen some modest improvements in 2019. By June, total soybeans exports were ahead of 2018 numbers, and that’s before the busiest time of year.
Encouraging signs out of Beijing show up in US export numbers and in soybeans futures markets.
Futures contracts are basically commitments to buy a certain commodity at some future date for a fixed price. Predictably, futures contracts fell in value as trade tensions mounted throughout the second half of 2018.
Now, we’re seeing a modest uptick on news that US-China relations are, supposedly, back on the mend. China already purchased higher volumes of soybeans at the end of September ‘19, and things look encouraging for one of the hardest hit areas of US agriculture.
Soybean futureS looking bright?
Of course, we’ve been here before. Trump makes a regular habit of announcing good news just around the corner — e.g. last winter’s short-lived “truce.”