Soybean futures on the Chicago board of trade continued to remain muted on the back of an increasing blame gain from the White house over a phase one trade deal that looked to be the saving grace for U.S farmers after a prolonged stalemate between the U.S and Chinese Government.
Global commodities and Soybeans alike have had a bad time of it of late. However, the trade deal meant that there was genuine reason for optimism, with China committed to buy around USD 50 billion of agricultural products from the USA.
A need for an international investigation regarding the origin and causes of COVID-19 are not disputed by anyone, including China. For some, who happen to be running for office a second time, a tough image and some serious finger wagging could be just to keep their feet firmly under the White House table.
Finger wagging gets votes, but it also gets soybeans purchased in Brazil rather the USA. The worlds largest economy has UD 50 billion of goods to send to China, but the world’s second largest economy is no push over and is starting to flex its considerable muscle back.
The loser is always going to be the U.S farmer if this carries on. Soybean futures have a 26-day mid-value of 839, a level they currently sit above. However, the rally on the 26-05-20 has seen no follow through with market longs realizing that the purchasing power is currently shopping in South America.
Less ton miles for China, and a little lesson in finger wagging is not going to cause too much damage to either nation. The question is will the let a small flurry of blows escalate into real economic damage to themselves and the rest of the world?