Price
As we can see the price of soybean for the last six months has dropped dramatically between the end of may until July, the reason for that is definitely the impact of the trade war on the price, it first appears in July 2018 when China imposed a 25 percent on imports of soybean coming from the U.S. as a response from the tariffs imposed by the U.S on Chinese export.
American soybeans are really important to feed the growing middle class in China, where soy-fed pork has become an important part of the diet. The demand will be even more important this fall when soybeans from Brazil will be rare because of the end of their season. The typical period during which the U.S used to ship almost half of his production to China is in October and November so that could explain the rise of the price even though the trade war is still there, China still needs soybeans coming from the U.S.
Heavy rains devastate harvests
For the second year in a row, heavy rains had a negative impact in the soybean production. On one hand, the farmers have trouble meeting their quotas of soybean production. On the other hand, the rain forced shipments to pass down the Mississippi River instead of the usual west coast. This creates a bottleneck for the transport, which leads to delays, which then leads to an increase in the price of the soybean.
Iran might become the new first importer of USA
Even though Iran had big political issues with the USA, some reports on Financial Times and on other websites showed that the USA were filling the gap that China left, once they started to increase the taxes of importation from them, with Iran. Indeed, Iran became the first main importers of Soybean from the US in August 2018. The data from the U.S. Census Bureau explained that Soybean exports from the USA increased in August, to 123.7 MB in 2018 compared to last year. It also informed that Iran purchased 15.2 MB of U.S. soybeans which was much more than the past five years.
Recommendation
Recently we observed that the price of soybean is quite low. So with basic business knowledge, it will be clever to buy at the lowest price and based on this price forward curve we can see that there is an upward trend, hence the price is going to be higher. Therefore, buy at a low price and sell at the highest price. Moreover, we have to be informed of the upcoming events during the trade war.
Sources
Daniel Shane, C. (2018). China may soon regret slapping tariffs on US soybeans. [online] CNN. Available at: https://edition.cnn.com/2018/10/01/economy/china-soybeans-trade-war/index.html [Accessed 28 Oct. 2018].
Macrotrends.net. (2018). Soybean Prices – 45 Year Historical Chart. [online] Available at: https://www.macrotrends.net/2531/soybean-prices-historical-chart-data [Accessed 28 Oct. 2018].
1, B. (2018). Soybean Outlook – Stop guessing, start selling. [online] Farm Futures. Available at: https://www.farmfutures.com/story-weekly-soybean-review-0-30767 [Accessed 28 Oct. 2018].
Press, T. (2018). Rainy harvest devastates Louisiana soybeans for 2nd year. [online] The Seattle Times. Available at: https://www.seattletimes.com/business/rainy-harvest-devastates-louisiana-soybeans-for-2nd-year/?utm_source=RSS&utm_medium=Referral&utm_campaign=RSS_all [Accessed 28 Oct. 2018].
Shedlock, M. (2018). Iran Replaces China as Top Importer of US Soybeans. [online] FXStreet. Available at: https://www.fxstreet.com/analysis/iran-replaces-china-as-top-importer-of-us-soybeans-201810302207 [Accessed 28 Oct. 2018].