Chicago soybean futures prices dropped sharply this morning after China unsettled investors by announcing that it would impose punitive tariffs on imports of US goods shortly.
Corn prices also fell significantly, as the feed grain is also on the list of the goods concerned, which are to be burdened with an additional 25% import duties.
Dealers' response to soybeans was strongest as the US supplied 35 million tonnes of soybeans to China. In initial reactions, however, traders believe that South America can not absorb this amount, especially as Argentina is suffering from a drought this year. Therefore, many market participants are also surprised that soybeans are listed in the package. Others now believe that the oilseed market is now in trouble, so a large rejection must have an impact on the market.
China also imports US corn. But there are not enough details about how China wants to impose punitive duties. One must first know the concrete implementation measures. In the short term, however, investors see the market for agricultural futures bearish. Therefore, they are selling for the time being and waiting for the answers to their questions latercome.
Text: HANSA Derivatives Trading GmbH / 
