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Grain prices are growing, the reason is friendship between the US and China

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Grain prices are growing, the reason is friendship between the US and China
May 21
09:00 2018

It took only one day for soybean prices  to reach their maximum. This happened against the backdrop of the US statements of a clear truce in trade relations with China.

After two-day talks in Washington, the two powers announced an economic union.

On Monday, July futures for soybean SN8 rose in price by 2%. Currently, the price is $ 10,225 per bushel ($ 375.7 per ton).

Following the beans, July futures for corn also grew (by 0.8%,). At the moment, a bushel of corn is being traded at $ 4 per bushel ($ 157.5 per ton). On the Chicago Mercantile Exchange, wheat went up by 1%, reaching $ 5.22 per bushel ($ 191.8 per ton). On the New York Mercantile Exchange, the cotton fiber contract rose by 2.4%.

Few people know that cotton is an important export item in the USA. So, last year the country shipped raw cotton amounting 5.8 billion US dollars.

On Sunday, US Treasury Secretary Steven Mnuchin said that the administration of Trump would suspend trade and postpone the introduction of additional import duties from China, as the countries were developing an agreement to reduce the trade deficit between each other.

Earlier, China had decided to increase trade duties on more than 120 imported goods from the US. This was a countermeasure on Washington’s actions, which had increased the tax on imports of steel and aluminum.

According to Peter Mayer, Senior Director of Agricultural Analysis at S & P Global Platts, this year an increase in import of soybean  to 151 million metric tons is expected. 64% of all soybeans are planned to be imported from China.

US Trade Representative Robert Lightizher issued a statement saying that Washington could resort to introducing additional tariffs if China did not make real structural changes in its economy.

Some analysts agree that the statement of the Armistice in the trade war has raised a shroud of uncertainty that will open the door to the largest importers and exporters of soybeans in the world.


The material was prepared with the participation of Katya Gordon,
a leading analyst of the brokerage company CT Trade


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