How Soybean Markets Responded to Trade War News


As a staple of livestock feed and cooking oil, soybeans are a critical component of diets in some of the world’s largest countries. Many market participants appear to rely on Soybean futures and options to manage the risk of price fluctuations, particularly as uncertainty increases.

The Sino-U.S. trade war has had a large effect on the Soybean futures market as well. China has long been the largest market for U.S. soybean exports. As rhetoric regarding tariffs became increasingly threatening on both sides beginning in April 2018, the resulting market uncertainty drove futures volumes to record levels. Even after tit-for-tat tariffs were implemented and the trade tension escalated, April 4, 2018 remains the highest volume day for the CME Group Soybean future since the beginning of the dispute.

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In December 2018, the Chinese and American governments agreed to a pause in any additional tariffs while they negotiated a trade deal. The original U.S.-set deadline of March 1, 2019 was delayed, and while a deal appears imminent, some uncertainty remains. Throughout the negotiations and tariffs, robust liquidity during recent trade war- related news suggests that CME Group’s Soybean futures markets will remain a central trading hub

2 A.M. Volume Spike

Retaliatory Chinese tariffs were reported several hours ahead of Chicago trading hours on April 4, 2018. Asian and European traders were able to position themselves using Soybean futures, with a volume spike at 2 a.m. Chicago time. Round-the-clock liquidity in the market allowed traders around the world to promptly take positions in response to the news that both sides in the dispute were digging in their heels.

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