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The main contracts of soybean futures on the Chicago Board of Trade recently declined by about 5 percent.
This is a tragedy for some Chinese crushers. The rare drought in the United States this summer pushed up soybean prices in the futures market and also promoted panic buying around the world. Prices of both soybeans and bean pulps hit historic heights. The total cost of imported soybeans was even higher than the 5,000 yuan ($802) per ton in summer and 4,400 yuan now.
China imports 80 percent of its soybeans consumed at home. The US is the largest soybean exporter in the world. So edible-oil prices in China are to some extent controlled by the US. Yet the pre-estimated statistics of the output is issued by the US Department of Agriculture, and the pricing standard of the international soybean trade is decided by the Chicago Board of Trade.
This year's soybean incident shows that Chinese enterprises do not have the necessary means to obtain crucial business information. And they are paying a heavy price for this disadvantage.
Most Chinese enterprises rely on secondhand information from Western sources. No Chinese enterprises or associations have conducted a thorough investigation and analysis in the US. Besides, Chinese enterprises should build their learning curve fast in the futures market to lower the potential business risks.
In fact, Western investors occupy an advantage in the market because they have access to important information. The US' dominance of the international financial and trade system gave US investors unique privileges over their counterparts in other parts of the world. It is much easier for them to make the right choice early than it is for others.
As China is seeking a higher position in the international market, Chinese enterprises must develop their abilities in information collection and analysis in their fields. Market competition is more like a competition for information.
Translated by Li Yang from 21century Business Herald