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Soybeans Price Under Pressure as African Swine Fever Spreads
January 29, 2019 10:41 amVideo
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In recent months, the focus on
the price of soybeans has revolved around tariffs and the ongoing trade war.
Investors believe that the ongoing trade war will reduce the imports of
soybeans from the United States. Indeed, the amount of soybeans in storage the
US has increased as imports from its biggest customer have reduced. At the same
time, imports from other countries like Brazil have increased.
As the talks between the United
States and China have restarted, the price of soybeans has seen an upward trend.
Indeed, in the past one month, the price of soybeans has risen by more than 1%.
This is because traders believe that a deal between the two countries will
happen. If it does, China has already indicated that it will increase the
purchases from the United States.
Even with this optimism,
investors appear to be ignoring a major issue that is currently going on in
China. Last year, the outbreak of African Swine Fever emerged and to date,
thousands of hogs have died. China has more than 400 million hogs. The disease
is highly contagious and can spread by dead and live pigs. Soybeans is crushed
in the production of oil and animal feed, with Chinese hogs being the biggest
consumers. Therefore, since the disease is hard to control, there is a
likelihood that it will lead to more deaths, which may affect the demand of the
soybeans.
This month, the price of soybeans
has moved higher to an intraday high of $926 as shown in the chart below. Since
then, the price has eased a bit and has moved to the lower line of the 20-day
moving average channel. Even with the swine fever problem, there is a
likelihood that the price of the beans will continue moving up. This is because
investors will continue focusing on the issue of trade. If it does, it will
likely test the important level of $1000 this quarter.
The post Soybeans Price Under Pressure as African Swine Fever Spreads appeared first on Forex.Info.
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