Rising interest rates in China will have a negative impact on US soybean and wheat markets

Introduction: Dow Jones, Kansas, Oct 28: China's central bank announced its first rate hike in nine years on Thursday, which may have a negative impact on the U.S soybean and wheat markets However, analysts said Thursday that it is not clear how much China's rate hike will affect the U.S market Most analysts agree that the news of China's interest rate hike is bad for the soybean and wheat markets, as China's efforts to slow economic growth will reduce demand for specific commodities Other analysts say the rate hike is more likely to affect commodity markets such as energy and metals, because economic growth or slowdown will have a more direct impact on industrial demand According to Anne Frick, an analyst at bacon securities, the impact of China's interest rate hike on the soybean market is more psychological, and the range of interest rate hike in China is actually very moderate The Chinese government on Thursday said it would raise the benchmark one-year lending rate from 5.31% to 5.58%, and the benchmark one-year deposit rate from 1.98% to 2.25% The adjustment will take effect on Friday Industry insiders say the increase in interest rates will increase China's import costs, and China will only encourage domestic farmers to grow more soybeans and wheat to meet domestic demand If China's economic growth slows down, then demand for soybeans and manufactured goods will also gradually decline, Frick said Raising interest rates may raise purchasing costs and slow down soybean imports If it does, it is more likely to be bad than good However, it remains to be seen how much effect China's rate hike will have, Mr Frick said According to the report, China's economic growth slowed to 9.1% in the third quarter from 9.5% in the second quarter, so it seems that China's measures to curb economic growth have played a role But China's interest rate hike and its impact on the grain and soybean market may depend on whether the central government continues its cyclical credit tightening measures, or whether the hike is just to slow economic growth 'we don't think there is any obvious sign that China will have to take drastic measures at this stage, so she thinks China may wait to see the effect of the rate rise before taking the next step,' Ms Frick said Most analysts said the impact of the news, if anything, was a little bit of bearish on the soybean and grain markets A Bill Nelson, vice president of G Edwards, believes that China's interest rate rise will have a negative impact on the whole market On the face of it, Mr Nielsen said, the news is bad for the business market Since April, China has been trying to slow down its economic growth, eventually leading to a gradual slowdown in imports In terms of the wheat market, farmers in North China are increasing their winter wheat planting area and reducing their cotton cultivation, Nielsen said, which may be a signal that the government wants to reduce its dependence on overseas wheat In the long run, China may want to encourage farmers to grow wheat or send such a signal, Nielsen said China's interest rate hike will not have an immediate impact on the wheat market, but farmland rebroadcasting may affect the price of next year's wheat harvest Meanwhile, China has been buying a lot of meimai in recent weeks In the weekly export sales report released by the USDA this week, China became the largest buyer, purchasing 463200 tons of US wheat However, John klester, an independent agricultural analyst, said China may now be more careful about importing soybeans as a result of higher interest rates As he has said in the past few months, China will be an increasingly tricky buyer, klester said Higher interest rates will affect import demand Raising interest rates will not significantly reduce demand, but will make buyers more cautious That could have a psychological impact on the market, which has been very active in buying US goods in recent weeks, klester said China's interest rate hike will not cause sharp fluctuations in soybean prices.