Soyabean and soyabean oil prices have been recently supported by the developments of the US-China trade war, with indications that China might resume its purchases of US farm goods.
On 11th October, Trump announced that the “phase one” of an agreement was implemented, being the first step toward a resolution of the trade tension. China would increase its annual purchase of US goods by 40B to 50B USD over the next two years, including soyabean imports. In exchange, the US would agree to delay the expected increase by 5% of tariffs on Chinese exports.
The soyabean market reacted promptly to the agreement, with the CBOT soyabean prices increasing by 5% m-o-m in October only. As a result, US exports have rebounded significantly since August), rising by 16% y-o-y (July-October), particularly to China, following the progress made with the trade talks. As at September 2019, soyabean prices were trading 15% below the prices in March 2018, when China introduced tariffs in US soyabean.
However, with the “phase one” likely to be delayed until next year, the market's optimism towards the application of the partial deal could fade quickly and have significant implications for US soyabean prices in the next few months.