China’s Economic Woes Could Affect U.S. Soybean Farmers
Current upheaval in China’s economy is spreading concern across the U.S. soybean industry. As the largest importer of soybeans in the world, China plays a key role in the success of the global production machine.
Over the past decade Chinese buying of U.S. soybeans skyrocketed, but the country’s economic slowdown has resulted in much lower forward buys from China than this time last year. At the same time, production in the U.S. is high and competition from overseas exporters is intensifying.
Soybean production in South America has boomed, while their cost of production is slightly lower than in the U.S., giving them an advantage on international markets.
“There’s more supply from our competition in this case – Brazil and Argentina,” said economist, Brian Basting, adding that he believes U.S. soy markets will remain under pressure through the end of 2015 and possibly into 2016.
Although it is not known how long China’s economic slowdown will last, South American soybean production will likely remain high and climbing.