• search
For Quick Alerts
ALLOW NOTIFICATIONS  
For Daily Alerts

Mr Soybean is a proxy in the US-China trade war

|

Beijing, Sept 19: Two of the world's biggest economies are in the middle of a serious trade war and one of the biggest casualties of this war is soybean. The strikes and counter-strikes between the US and China over their trade have seen the prices of soybeans plunging to near 10-year lows and both the producers and importers have faced a steep challenge because of this, according to a piece in China's Global Times.

Mr Soybean is a proxy in the US-China trade war

In the piece penned by Nelson Low, executive director of Commodity Products, Asia Pacific, CME Group, soybeans constitute a "perfect proxy" for the ongoing trade dispute between the US - the largest producer of soybean and China, the largest consumer.

Also Read | US- China trade war escalates after Trump slaps tariff

"Although the end products of soybeans are as diverse as tofu, biofuels and industrial lubricants, their prime commercial use is as soybean meal, which represents two-thirds of their economic value. Soybean meal accounts for 60 percent of world meal production, and it is used mainly as animal feed, the majority of which ends up in China. Another third of soybeans' economic value comes from soybean oil, which is considered to be the second most important vegetable oil," Low wrote.

The US is still the largest soybean producer though Brazil threatens to overtake it the current fiscal, growing 120.5 million tons compared to the former's 117.3 million tons. The report said, adding the US yet remains a key player in the global soybean trade.

China, on the other hand, is the largest importer, buying over 60 per cent of the global export in 2016-17. This over concentration of the global soybean market makes it a crucial component in the US-China trade war.

Also Read | Trade war: China hits back, imposes tariffs on 128 US products

The rising demand of soybean over the years because of growing consumption has been mainly driven by China. Other Asian countries have also contributed, thanks to economic growth, rising population and growing meat diet.

According to Low: ".Rising demand is just one factor that contributes to price volatility. Other factors include the high concentration of soybean production in only a few producing countries, weather and the unpredictability of what farmers will choose to sow each year at the start of the planting season. Given these variables, the USDA's (US Department of Agriculture) World Agricultural Supply and Demand Estimates report typically has a big impact on prices when it is published."

The ongoing political tension between Washington and Beijing has raised the soybean price volatility. China had warned that it would impose a 25 per cent tariff on soybean imports from the US in April 2018 in response to the US's imposition of tariffs on Chinese goods, which would put soybean prices on a downslide.

China went ahead with the tariff on July 6 soon after the US put 25 per cent tariffs on Chinese imports worth $34 billion and it led to further fall in the prices. The tariff hit the export patterns with China raising the imports from other countries like Brazil. American soybean producers, meanwhile, have to explore fresh market opportunities.

For Daily Alerts
Get Instant News Updates
Enable
x
Notification Settings X
Time Settings
Done
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Oneindia sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Oneindia website. However, you can change your cookie settings at any time. Learn more