NC – As the trade wars linger on North Carolina farmers are getting a reprieve from volatile market disruptions as soy futures rise on the back of China restarting purchases.
Despite our rankings in the tobacco harvest, or sweet potatoes, there is no larger agricultural footprint in the Old North State than that of Soy. With soy planted in all 100 counties, on approximately 1.6 million acres, the crop represents upwards of $800 million a year for North Carolina farmers.
That’s why the trade war playing out on the international stage between the U.S. and China has such a direct effect on us here at home; China buys A LOT of soy.
Or, at least, they did; until the crop got caught in the tit-for-tat battle moves of the trade war. After one of the myriad round of tariffs on Chinese goods announced by the Trump administration, China responded, in part, by throttling its soy purchases. Last month, though, they started buying again as the two largest economies on earth work toward a trade deal.
From the Wall Street Journal:
“Soybean prices have rallied since China resumed purchases of the key U.S. crop ahead of trade talks in Washington next week.
Chinese buyers purchased more than 1.5 million metric tons of U.S. soybeans last week alone, according to data from the U.S. Agriculture Department, and have purchased at least 716,000 tons this week. Those are some of the biggest purchases in over a year since the U.S. and China began to spar over trade policy and apply tariffs to each other’s goods. The trade war has pushed down prices for soybeans and other crops, worsening a tough downturn for farmers.
Now, with new talks looming and China buying soybeans again, soybean futures have climbed 5.7% on the Chicago Board of Trade since Sept. 6 to $9.12 a bushel on Thursday, a level unseen since July. China’s big 100,000-ton-plus purchases began in mid-September.
“It’s just a complete narrative change in the soybeans,” said Ted Seifried, chief marketing strategist for Zaner Group. […]”
As with any global commodity there are multiple factors that push and pull market prices. The Chinese restart certainly pushes prices up, but weather factors affecting harvest, and hog feed demand are predicted to keep prices below pre-trade war levels. (African swine flu has reportedly decimated up to half of China’s hog population, which they use soy to feed)
While recent price jumps are welcome respite for soy farmers, it is merely reclaiming lost ground in the lat couple years as the protectionism push threw a wrench in market prices.
With any luck, the Chinese regime will acquiesce and a deal can be struck in which China is held to account for its astronomical amount of intellectual property theft while playing fields are leveled as they are cleared of protectionist measures. That way the American people can get back to doing what they do best, and governments in Beijing and D.C. get out of the way.
Read more about recent developments affecting the soy market from WSJ.