“In fact, both Chinese and global demand for soybeans is increasing, which means any reactionary price dip because of trade policy affecting soybeans could conceivably end up becoming a buying opportunity,” Gilbertie told ETF Trends.
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If the U.S. or China were to put trade restrictions in place or if China looked elsewhere for its soybean purchases, Gilbertie said there would likely be temporary pressure on the price of U.S. soybeans.
“However, global soybean prices, including those in the U.S., would very rapidly adjust back to normalcy, because there is too much global demand for soybeans with too little excess supply for any price decline due to trade policy to be sustained,” he said. “China’s people and animals need to be fed, and no amount of trade restrictions of any kind will affect the long-term price of soybeans, simply because global demand for soybeans is so large.”
Gilbertie said in the end, no matter what happens with U.S. trade policy or what choices Chinese buyers of U.S. soybeans end up making, the U.S. is such a large global supplier of soybeans that U.S. soybeans would find their way to China anyway, and soybean prices inside the U.S. prices would likely adjust back to true value accordingly.
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