The Growing Threat Of Soybean-Inspired Social Unrest In China

Tyler Durden's picture

Two weeks ago we explained why the drought-inspired soaring price of Soybeans  - specifically from the US - would notably influence global central-planners' actions - and more specifically the Chinese (given its high impact on food price inflation). Food prices remain elevated and the PBoC is undertaking Reverse Repos - the exact opposite of an RRR-driven easing program so many expected. However, there is a further, deeper, and more troubling consequence than 'simple' inflationary arguments - that of social unrest. Confirming our insight, the LA Times points out,

Soybean oil is the most important edible oil in China with more than two-thirds of cooking oil consumed in China coming from soybeans - and most of those soybeans are supplied by the US (more than half of US exports are to China and the US is China's number 1 supplier). According to one official this "makes [China] vulnerable to the drought" and bound to the fortunes of farmers in the American heartland. The Chinese devote more than 20% of their income to food (three times more than Americans - according to the USDA).

This means the dramatic rise not just in grain prices, but in the up-stream prices of meat, eggs, and milk combined with the until-now newly affluent (un-dirt-poor) Chinese have grown transitorily-used to an "everything needs oil" attitude when spending and this price-jolt to newly entrenched tastes is why authorities are concerned about social stability; as IHS points out "Inflation has a long history of sparking discontent, so obviously it's on the forefront of the Chinese leadership's mind."

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
LawsofPhysics's picture

The Chinese have gold and we have soybeans, no problem.

sitenine's picture

@LawsofPhysics - Except that there are many fewer soybeans due to the drought, problem.

malikai's picture


This article presumes two things which I think are inaccurate:

  1. Soybean oil is unreplaceable.
  2. That Chinese people have no ability to deal with shortage.

These are in the grand scheme of things, not a big deal. First of all I've never seen my mother-in-law (Chinese) cook with soybean oil.

Second, I'm pretty sure that during the great leap/cultural revolution, people had shortages too. They dealt with shortages on a scale that would make the current crop failures stateside look like nothing.

Banjo's picture

Yes I belive 55-60 million people starved. They dealt with it alright.

AldousHuxley's picture

china's strength is that they have lots of people for labor.

china's weakness is that they have lots of hungry people to feed.


control food, control China.

sessinpo's picture

Liberals/socialist/communist from both the left and right dispose of people when it suits their needs. Food isn't necessary.

RestoreOurFuture's picture



It's a shame that our current president allows China to treat him like a "doormat," to quote Paul Ryan.  "They steal our intellectual property rights. They block access to their markets. They manipulate their currency."  

And yet our president does nothing! Even the liberal hub of the universe, Saturday Night Live, mocks China's treatment of Obama.

With millions of Chinese starving and totally dependent on American companies like Cargill and ADM, don't you think we might have a little leverage?  Haven't you had enough, already?

Romney/Ryan 2012  

FieldingMellish's picture

Its not nice to talk about your creditors like that.

RestoreOurFuture's picture



If you knew that China was allowed to bypass our primary dealers on Wall Street when buying our debt, you might switch your sympathies to our REAL creditors.  Just another example of Obama kissing China's ass, and getting nothing in return. 

Romney/Ryan 2012

fonzannoon's picture

I am aware that China IS allowed to bypass our primary dealers and that tells me a lot about our real creditors.

RestoreOurFuture's picture



Don't be fooled.  China needs us just as much as we supposedly need them.  If you knew that our Federal Reserve can purchase over half our issuance and our rates still trend toward zero, it might influence your opinion on who our real creditors are.  When did we start kissing China's ass? You think Reagan would have allowed this mockery of our nation?  Was the cold war so long forgotten that we've been slowly and methodically turned into a nation of subservient fools?

We need to remember who we are, and we're NOT a nation that bows to China, as your rhetoric suggests. 


sitenine's picture

"Was the cold war so long forgotten that we've been slowly and methodically turned into a nation of subservient fools?"

Are you suggesting otherwise?

fonzannoon's picture

They can pull the plug on us in 2 seconds flat. What can we do, stop buying their shit? So much worse can it get over there for those foxconn workers? You think they would give more of a shit than we would if our credit line got pulled? Are you for real?


Solarman's picture

Re-read the article on who has the rug to pull.  China is so screwed; No Navy, not enough raw resources not enough food, and not enough energy.  They stop buying or start selling Treasuries in a manner that threatens us, we declare jubilee on the bonds.  Then they have jack squat.

AldousHuxley's picture

russia has plenty of natural resources.

Mongolia got shit tons too and not many living there.


US is the one screwed. heavily in debt.....forced to go to war against debt holders like some desparate fuckers of Nazi Germany.



chump666's picture

You fools.

China right now is buying up USD's and messing with short term UST yields (driving them up).  Nothing to do with risk on, economic improvement or any of that garbage.  Point is, China, due to America being a debt laden Fed/Bernanke controlled inflation machine with sprinkles of Keynesian psychosis, is about to show the world who controls global wealth and excess.  Our debt binge is about to end, brutally.

Time to take the pain. 

The West has turned into a f*cking laughing stock


fonzannoon's picture

Chump I repect your outlook a lot, but let me ask you this (and let's leave this Romney putz out of it) don't think that the minute this market starts to correct, if it ever does...yields won't come right back down?

chump666's picture

This is something we gotta watch.  See, the USD is bid whist markets have been rising, kinda usual (in a money printing environment). Usually, USD is bid, market stays capped or starts to sell.  To me, that is a warning sign that 1.  The market is very overbought, 2.  A major correction is building.  As for yields rising, again, the risk on environment has NOT been that inundated with volumes and risk buying (note USD buying, which is a proxy hedge against risk).  I would say that yes, yields will come back down when we correct/crash.  But, the worry is Asia, creditors starting to look bearish is...well very bearish for the world. 

In summary, if Asia leaks massive outflows into USD's, it may start to lift rates.  It's all about China.  Ignore their problems at ones peril.

"...this Romney putz"

I love it.

chump666's picture

and I would be checking the volatilities in options, more so with FX EUR etc, to see the hedging that may start to kick in, we will probably see that in the VIX too as it starts to rise.  There is a ton of event risks forming, with Asia in the mix.

Volatility will start to pick up.

bankruptcylawyer's picture

there is some truth to this, but if history teaches you anything it's that the insiders will take advantage of the situation to make sure that whoever loses, they win.


insiders = private families and groups that live in the u.s. and europe, and have been responsible for expanding the western control over the world for the last 150 years.

excluding russia, the u.s. presumably possess more nuclear ballistic missiles than the rest of the world combines. in the REAL end, all financial international trade cycles, and the creditor status of nations, is derived from the results of war, not from the results of banking.of course, to complicate matters, war costs money and must be financed---so the fractal nature of history is mired in all sorts of feedback loops.


all i'm saying is that germany was way less  militarily powerful relative to the rest of the world than the u.s. is now-----and that mutually assured destruction assures that we will be able to push our debtors around for far longer than one would ever think possible.

OpenThePodBayDoorHAL's picture

OK a few points:

1. The Fed doesn't "purchase" over half our pretends it has the money by printing and expanding its balance sheet, now leveraged 66:1.

2. Yes, debtors are subservient to creditors, always have been. The thing to do now is to figure out how we went from the biggest creditor to the biggest debtor in less than a generation. I'd suggest it could be because politicians (like Paul Ryan) voted for things like Medicare Part B unfunded entitlements for $1.6 trillion. And because other people (like Mitt) and corporations dodged taxes on something like $32 trillion. The top 20 corporations in the US paid their CEOs more money than they paid in US taxes last year.

3. Just to be clear, I think Obomba and the Dems suck too.

AldousHuxley's picture

Guess who was the president when US turned from creditor to debtor nation?

sessinpo's picture

I'm only giving you half credit. Here is my reason.


The bugdet is controlled by Congress, more specifically the House but that has been altered and manipulated over the last few decades.

During Reagan's Presidency, DEMOCRATS controlled the House. In fact DEMOCRATS have controlled the House the majority of time from 1955 to 1993. They also controlled the Senate the majority in that same time period.


I give your half credit because laws still require the President's signature. How about presenting the full truth.


Vet4RonPaul's picture

Dear RestoreOurFuture, What is it with you neocon chickenhawk always war-mongering?  Neither Romney or Ryan ever served in the military but they're gung to send other people's kids to war and to use other people's money to do it.  Romney and Ryan are the same neocon chickenhawk crap we get with Obama and Biden; except that the latter will win cuz they are slightly more socialist.

AldousHuxley's picture

because neocons represent interest in 2 industries: oil and military industrial complex.


they lie about cutting deficit and get in debt to fight wars in middle east for oil while cutting taxes!


remember it was under Reagon and his republicans which turned US into debtor nation.....

sessinpo's picture

"because neocons represent interest in 2 industries: oil and military industrial complex."

"remember it was under Reagon and his republicans which turned US into debtor nation....."


And on the other side of the spectrum, it is the liberal facists that have their interests in not only the military industrial complex, but the domestical social programs. Even without wars, the liberal social programs would bankrupt society as they are pyramid schemes. And just to show you my unbiase, BOTH parties are guilty of this as this is another means of taxationa and control over the population.  To blame neocons is not correct as both parties engage in this.

Flakmeister's picture

They couldn't pay me enough to type the crap that you do....


Schmuck Raker's picture

Given the choice of kissing China's ass, or "Our Real Creditors(The Federal Reserve Banks)' " asses, I will choose Chinese ass.

Now then, ask me where I'd prefer to stick my Koch.

Canaduh's picture


Inthemix96's picture


While having been part of this community myself for a while, and having been a long time lurker before hand, I think you need to aquaint your good self with the types of folk who inhabit these pages.

You and your partisan bullshit wont work here son, you can say whatever you like about the ZH lot, but fuck me sideways if there are not some damn clued up folk in here.

Fuck off, and the horse you rode in on

Disenchanted's picture



"we're NOT a nation that bows to China"


No, we are a nation that bows to Israel.


Yes, because U.S. interests are clearly advanced around the world by reinforcing the perception that there is no meaningful difference between the United States and Israel on any issue. In other words, U.S. interests will take second place to the need to promote a phony common front to the world. Romney certainly knows something about putting forward a phony front. It’s useful to know that Romney’s priorities are still as confused as ever.



Abitdodgie's picture

To Restorourfuture ,  Romney/Ryan 2012    All I can say to that is "You carnt fix stupid"

reefermadness's picture

Please don't quote Paul Ryan, I'm against big gubmint but I still vote for it everytime. 

Imminent Collapse's picture

Hey Romney Troll, there isn't ten cents worth of difference between Romney and Obama. Both are bought and paid for. Neither will honestly deal with our deficit issues. Get real and stop with the political plugs. We saw what the Republicans did to Ron Paul.

Precious's picture

Don't fall for spoofing trolls.  Probably paid $12.50 an hour by Soros to post stereotypical rants.

r00t61's picture

That's certainly more than the Chinese "fifty-centers."

mammoth mo's picture

But you know he's paid and paid well to shill.  Surely no one believes two friends of Wall Street actually have some difference.

Tinky's picture

Yeah, right. A reckless Romney foreign policy is just what the U.S. needs at the moment.

Take a hike.

shovelhead's picture


You can't tell me that real Murican boots-on-the-ground murder isn't lots more fun than Obama's girly-boy drone video game attacks.

Drones don't make Generals and the career opportunities that come with rank.

Get with the program please.

We need good jobs for good wages, dammit.

hangemhigh's picture


"It's a shame that our current president allows China to treat him like a "doormat," to quote Paul Ryan. "They steal our intellectual property rights. They block access to their markets. They manipulate their currency."

yo, mdb.....i see that you read the memo and got with the program.........nothing quite as satisfying as a quick costume change and a couple of sassy new takes.

don't let all of the whining and sniveling here by the marginalized psychotropes mess with your chip-set, dogg........don't worry.....there's  lots of us here at ZH that think you got a big future as a gop ken doll.....just remember...all of us neogoys,.....we got your flack side.................


Overfed's picture

No matter what, Romney is a douchebag. So is O'bomb-a.

Ineverslice's picture

RestorOurFuture- (haahaa)

 You are wasting away existence with this dumb job of yours. Come clean, otherwise....

Go pump yourself.

DaveyJones's picture

is their gold genetically modified?

FieldingMellish's picture

Sorry Tyler, Brazil supplies more soybean to China than the US does:

DoChenRollingBearing's picture

Yes, but, a QE3 might push soybean prices higher as well as other ag commodities.

So says a Barron's columnist this weekend.  Review of "Barron's -- Dated 20 August":

FieldingMellish's picture

Naturally, the overall premise of the article is sound. Its just that glaring detail that is wrong.