Last week, China announced that it would slap 25% tariffs on 106 American products including soybeans, deemed by some to be the “crop of the century”. The tariffs, if carried out, could disrupt global soybean trade flows and change planting decisions at farms across North & South America.

Celebrated for its versatility, the soybean plant can be transformed into many products, be that tofu & cooking oil for the kitchen or biodiesel for agribusiness. It can also be crushed into soya meal and fed to chickens, pigs and fish which will quickly fatten up thanks to the plant’s superlative protein content. As incomes have risen in emerging Asia, so too has the consumption of animal protein, which has driven up demand for feedstock – especially in the form of soya meal – across global farms. While world demand for staples such as wheat has been rising by 1% a year, in line with population growth, soybean demand has been rising by 5% a year. Accordingly, from the rural United States to the Brazilian interior and Argentine pampas, farmers have been racing to grow enough soybeans to meet this demand. Last year, soybean became the most widely sown crop in the United States, surpassing corn.

As with many commodities, China is the main driver of demand growth, which is why news of a 25% Chinese tariff on American soybeans sent tremors through the market last week. China imports two-thirds of all soybeans traded globally, and accounts for nearly 60% of American soybean exports. In 2017, that amounted to 32 million metric tons of U.S. soybeans sent to China and $12.4 billion in revenues . . .

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