China bought $US19.6 billion worth of US agricultural commodities in 2017, up 136 per cent from a decade ago. This included 61.2 per cent of the US's soybean crop, the US's most significant agricultural export, worth $US21.6 billion a year.
China's recent imposition of a 25 per cent tariff on US soybeans has potential wide-ranging effects in both economies.
Soybean sales from the US to China fell 96 per cent between November 2017 and November 2018, according to US Department of Agriculture figures.
“Suddenly US soybean farmers have had to make their product 25 per cent cheaper to sell it at the same price to China as farmers in Brazil or Argentina," Moscoso says. “The US already has an extremely efficient infrastructure for exporting soybeans. There isn't much more they can do to bring down the price of production."
Brazil is expected to overtake the US this year as the world's largest soybean exporter as it steps up to meet Chinese demand.
But Moscoso expects China's government will need to act if Brazil is unable to meet China's demand or if other factors cause the price of soybeans to climb.
“Governments intervene in agricultural markets more than others because people need to eat," Moscoso says. “When prices rise - usually as the result of a prolonged drought but also potentially through trade barriers - this can have a real impact on the population. So governments start buying to keep prices stable."
Moscoso believes the US and China will reach a mutually beneficial agreement in their trade dispute.
“There are rarely any winners out of trade wars but on this occasion, other producing countries may end up in a better position and the flow of agricultural trade around the world could end up looking very different," he says.
“There could also be an upside for China and US in not being too reliant on each other for agricultural trade. This comes in the form of new trade relationships and new investment in agricultural production in other parts of the world. This will help to protect global food production from acute weather events in small regions of the world in future. One thing is for certain, next year will be a volatile year across many assets, and especially commodities.”