Grain traders have a lot to contend with right now.
From European sustainability requirements to tariffs and other reverberating impacts from Donald Trump’s trade wars, price volatility and uncertain access to long-establishment markets are a reality.
Why it matters: A decrease in available containers is the biggest risk facing the food grade soybean market right now.
The situation report for Identity Preservation and food grade soybeans, however, appears comparatively stable – for now.
Ships and containers
Food grade and IP soybeans is a “very long-term business,” says Brian Innes, executive director for Soy Canada.
“As a result, the demand for Ontario food grade and IP soybeans remains strong. And the market situation for farmers is mostly affected by supply and logistics.”
The movement of IP and food grade soybeans is highly tied to the global container system. Inness says container movement has similarly remained relatively normal – occasional disruptions due to port delays, monopolized railways, and other factors considered part of that normality.
What Soy Canada is watching now is whether a reduction in available containers occurs as a result of tariffs imposed between China and the United States. A second longer-term concern is the availability of ships themselves, as the U.S. continues taxing Chinese ships calling into American ports in an effort to build its own ship construction industry.
“It pre-dates the current administration,” says Innes. “There may be more ships calling in Canada. That could bring more containers into Canada and make containers more available. It could also mean there’s less containers service to North America.”
“We’re at a time of year where the soybean market favours South America. We’re not at a more sensitive time of year for Canadian beans…Demand fundamentals for food grade soybeans remain strong and we continue to have a highly developed system to export soybeans from Ontario.”
Wait-and-see approach
Colin Richardson, export manager for Snobelen Farms, agrees with much of Innes’ analysis.
End customers, Richardson says, “know what they need,” and are continuing to cover those needs. There has also been an absence of significant delays – particularly compared to other periods over the last five years.
“I think everybody is taking the wait-and-see approach,” says Richardson. “A lot of it is just the uncertainty. It’s different than during COVID, when people were panic buying.”
The availability of containers and ships to move them is something Richardson is also watching, though.
Port congestion, a drop in container availability, higher container pricing – a number of factors could affect the cost of moving the crop. Container pricing could be a particularly tough issue if the Trump administration, at some point, follows through with its initial high levies on Chinese ships calling on U.S. ports. Such levies would add many hundreds of dollars to the cost of each container.
That risk aside, Richardson has not heard anyone expressing concerns about potential black swan events, something he says is reflected by continued relative stability in container rates.
“I don’t see things going to sideways for us,” says Richardson. “Other than that, on the demand side, things are pretty stable…No one is panicking for shipments.”
