Large harvests and implications of US-China trade dispute force down prices

May 26, 2019 |

In Germany, UFOP sees sustainable agriculture and climate protection as losers and calls for fast action because soybean prices are on a downward slide all across the globe. The reason is both large harvests in Argentina and Brazil and the trade dispute between the US and China, according to UFOP, which has voiced concerns that this trend will also affect the current protein plant strategy efforts in Germany and Europe.

UFOP is deeply concerned about the development in soybean meal prices observed over the past weeks. What can virtually be called an extreme weakness in prices is due to a surplus both in the wake of large harvests in Argentina and Brazil and as a result of the US-China trade dispute. US soy has become a pawn in the trade dispute and is practically impossible to sell in China. UFOP has noted that conventional farming operations, but also more sustainability-oriented agriculture on both sides of the Atlantic are the losers of this trend. On the one hand, the plunge in prices enhances the pressure on income in the US soybean belt. On the other hand, in view of current soybean prices, the scale of the challenge of advertising the profitability of a protein plant strategy in Germany and the EU will increase if the price for soybean meal (which serves as a base price) remains on a downward slide.

At the same time, fears are that the Brazilian president Bolsonaro, pursuing a relaxed environmental policy, will authorize clear-felling of even more rainforest area in order to make it easier for Brazilian soybean farmers to expand their crop areas. The trade dispute between the US and China and its far-reaching implications threaten to undermine the obligations laid down in the Paris climate protection agreement, UFOP fears. The organisation believes that the consequences of a further decline in rainforest area could hardly be compensated.

UFOP urges that for this reason, the EU has to make an appropriate response by promoting the production of protein plants having the unique selling point of being “GM-free” – according to UFOP, these would explicitly include rapeseed and sunflowers – in a reliable and sustained manner. To this end, the Amsterdam Declaration of December 2015 would have to the implemented with the obligation to promote the use of “sustained and deforestation-free supply chains”.

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Category: Fuels

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