US-China Trade Talks May Be Delayed, Soybean Futures Plunge Over 3%

Due to the potential delay in US-China trade negotiations, Chicago soybean futures plummeted by as much as 3.5% on Monday, falling below $12 per bushel. China is the world’s largest importer of soybeans.

Soybean prices are particularly sensitive to tensions between the two countries because China is a major buyer of American agricultural products.

At the end of last year, a trade summit between the two leaders, after months of silence, prompted China to significantly increase its purchases of US soybeans. After reaching an initial purchase target of 12 million tons, China’s imports from the US slowed again, and any delay in upcoming negotiations could hinder the recovery of sales.

Tobin Gory, strategist at Conucopea Agriculture Analysis, said, “Trump’s latest statement will have a negative impact because it introduces uncertainty about China’s large-scale purchases of US soybeans.”

The most active soybean futures contracts once dropped by 3.5%, marking the largest intraday decline since early April. Soybean meal and soybean oil also declined, with drops of up to 2.5% and 2.7%, respectively.

Additionally, data from the US Commodity Futures Trading Commission (CFTC) released on Friday showed that as of March 10, fund managers had increased their net long positions in soybeans to the highest level in 16 weeks.

Mike Wilding, senior market advisor at CRM Agriculture Commodities, said, “If political events like US-China relations — especially involving the Trump administration — take a negative turn, it could pose downside risks to prices. The soybean market has high expectations for demand from China for US imports.”

Trump was scheduled to visit China in late March for talks, and at the time of his remarks, trade negotiators from both countries were meeting in Paris. Reuters reported on Monday that Chinese representatives are open to additional purchases of US products, including poultry, beef, and non-soyfield crops.

The Strait of Hormuz is a major global trade route for commodities, which has been effectively closed since the US launched strikes against Iran, disrupting supplies of oil, fuels, and fertilizers, causing prices to soar. The Trump administration is working with allies to ensure the strait remains open.