Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets.

US-China soya bean linkages

In the context of the ongoing US-China trade dispute, with China threatening to place a 25%duty on US soya beans, it is worth highlighting the strong linkages of these nations’ soya bean markets. Firstly, China is the world’s leading importer of soya beans. The key underpinning factor behind the country’s appetite for soya beans is the growing demand from the animal feed industry. Secondly, China is the leading market for United States (US) soya bean exports.

China’s 2017/2018 soya bean imports could reach 97 million tons, according to data from the United States Department of Agriculture (USDA). This equates to a 64% share of global imports for that particular season. Moreover, it is a 4% uptick from the 2016/2017 season. The leading suppliers of soya beans 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 soya bean trade relations. Suffice to say that the US remains an important player in the Chinese soya bean market. Between 2001 and 2016, US soya beans accounted for an average share of 41% of the Chinese soya bean imports market.

From the US perspective, China is an important market for soya beans, accounting for an average share of 45% of all soya bean 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 tons of soya beans to the world.

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

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