Source: granary of the world
With China's social and economic rapid development, with soybean as the main representative of the rapid growth of oil demand for agricultural products, but no corresponding increase in domestic production, lead to its dependence on imported more and more high, and the main years ago has become a global soybean importer, China's soybean imports up to 95.54 million tons in 2017, mainly to Brazil and the United States imports of soybeans, soybean imports from Brazil is as high as 50.93 million tons, accounted for 53%, 32.85 million tons of imports from the United States, proportion reached 34%. Meanwhile, China is also the largest destination country for us soybean exports. According to the us department of agriculture (USDA), the us exported 53 million tons of soybeans in 2017, of which more than half were exported to China.
Early in 2018, the market had hoped for further growth in Chinese demand, after the industry had expected annual imports to top 100 million tons, which would boost U.S. soybean exports. Unexpectedly, the plan failed to catch up with the change, and a "black swan" event involving Chinese demand appeared in the us bean market -- the outbreak of trade war between China and the us. As we all know, the emergence and existence of trade war between China and the United States has a far-reaching impact, which changes the global economic development situation and affects the agricultural market, especially soybeans. In fact, it's a realignment of global soybean trade order, because during China's tariffs on imports of U.S. soybean 25%, causing the buyer to increase the intensity of South American soybean procurement, this directly push up South American soybean liter discount, other countries and to give up, and the price is the beauty of South American soybean to purchase cheaper, at the same time also encourage China to actively expand new soy source of imports, such as Russia, asean free trade area, etc. In addition, it brought to an abrupt end years of soybean import growth and a long time decline. According to Chinese customs data, China imported 82.3 million tons of soybeans from January to November 2018, down from 85.99 million tons in the same period last year. This has also led Chinese authorities to promote the use of low-protein diets in pig, broil and layer farming in order to effectively reduce the use of soybean meal, and to import large quantities of Ukrainian sunflower meal, Canadian meal and other miscellaneous meal to replace soybean meal while lifting the import restrictions of Indian vegetable meal. Is after a trade war with China lead to weakening demand in China, speculative funds also in CBOT soybean futures options open market as "empty", under this background, the cheese makers are owned by CBOT soybean futures drop gradually since the early years march high mark for the support level and below 1000 cents, including 3 months minimum has tested to 839.75 cents, its early march high more than 21.6%.
Attached 1: map of beautiful beans
Up to early December 2018, the G20 leaders the 13th summit held in Argentina smoothly as scheduled, the two heads of state of China and the United States after more than a year and will pay an official since the trade war and reached important consensus, which decided to suspend the escalating trade war on January 1, 2019, including no longer improve existing tariff rates against each other, and no other goods new tariffs measures, the Chinese side agreed to immediately start to buy from the United States has not been agreed but very large agriculture, energy, industrial, and other products. The two heads of state also instructed the economic and trade teams of the two sides to step up consultations and reach an agreement in the next three months to cancel the tariffs imposed this year so as to bring bilateral economic and trade relations back to the normal track as soon as possible and achieve win-win results. A truce, China and the United States soon after signs of progress in China and the United States trade negotiations, such as on December 12, China to buy six months of the first batch of U.S. soybeans is important evidence, CBOT soybean futures contract in March in China demand helped again rose to 900 cents above, highest once rebounded to 941 cents, up more than 10.8% than the previous low of 839.75 cents. Just, time shift things easy, as the Chinese and U.S. officials have released by China purchasing U.S. soybean quantity lower than previous market expectations, the market under the condition that the number is difficult to help digest beauty bean big ending inventory, superposition of South American soybean listed high pressure looming, as such, CBOT soybean futures dropped back again mid to late December after a brief rebound and below 900 cents a share, as of late March 31 December contract closed at 895 cents, high rebound from the 941 cents down 5%.
Looking forward to the future, china-us trade negotiations on the new trend of the us price trend is still very critical. The U.S. government will send a delegation to Beijing for trade talks with Chinese officials the week of Jan. 7, according to people familiar with the matter. It will be the first time the two sides have held face-to-face talks since the two presidents reached a temporary truce in Argentina in early December. If a trade war with China if all goes well, the beautiful bean futures is still expected to moderate rebound, but the current global soybean supply abundant and African swine fever spread under China weakening demand or affect its late soybean demand, in this context, unless South America suffered serious adverse weather crops harvested, otherwise the bean is expected to rebound in prices space is limited, pressure level near 1000 cents mark will be the important resistance level.
