Geopolitical Futures
Back in July, China slashed its soybean imports from the United States, continuing its gradual pivot toward Brazil to satisfy its substantial demand for the crop. Now, weeks into the new export season, data from the U.S. Department of Agriculture shows that China, the world’s top soybean importer, has not booked any shipments of U.S. soybeans, and it is speculated that Beijing does not intend to purchase any soybeans from the U.S. this year. This marks a significant shift, as the U.S. used to be China’s largest soybean supplier.
Soybeans are crucial for both Beijing and Washington: While they are one of the United States’ most important agricultural products, China also relies heavily on imports for its supply of soybeans, which above all are used as animal feed and cooking oil. With trade negotiations intensifying between the two sides, this agricultural product is taking center stage as a key bargaining chip for China. And the diversification efforts go well beyond just soybeans: China has also decreased purchases of American corn, wheat and sorghum, while continuing to buy from Brazil, Canada and Australia. This fits into Beijing’s larger-scale plan to decrease its dependency on U.S. agriculture – something it already intended to do before the trade conflict started.
The situation is not without risks for both sides. U.S. farmers are already feeling the financial stress of the lack of Chinese orders as prices have begun to fall. At the same time, Brazilian soybean prices have shot up, and if Brazil does not have a good harvest, China will have to turn to its own reserves. As long as the two do not reach a trade agreement, things are more than likely to remain uncertain in both nations’ agricultural sectors.
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