Earlier this week, US President Trump announced a $12 billion aid package, for American farmers in an effort to assuage the financial woes inflicted by China’s retaliatory tariffs. The subsidy is aimed at some of the US’ most valuable agricultural exports. Despite this program, American farmers—particularly soybean farmers—still risk losing billions in the trade war. Moreover, as major export markets like Mexico consider purchasing high priority commodities from foreign competitors, the US agriculture situation looks increasingly desperate.
However, some relief seems to have come by way of a new soybean trade agreement with the EU. Soybean futures jumped today in response to news that the EU will buy a large quantity of the crop from the US in the coming months. As it stands, the amount of soybeans purchased is unknown, but considering the paltry volume sent by the US to the EU in the recent past, it will likely be negligible compared to trade with the Chinese market.
The EU was responsible for purchasing only 7.8 percent of US soybean export volume in 2017, and has never imported more than 11 percent of the US crop in the past decade. On top of that, the EU will likely acquire the soybeans at a discounted price unless circumstances change by the September soybean harvest. In a turbulent time for international agricultural trade, Gro Intelligence subscribers can access robust soybean data and analytics to stay abreast of new developments.