The first major event that had a significant impact on the soybean market was China’s ban on GMOs, genetically made organisms. In late October, Beijing blocked America’s biggest overseas market for soybeans to protect China’s farmers who cannot match low US prices. The US saw these efforts as a warning signal for a change in China’s foreign policy. If China were to ban the importation of soybeans, it would decrease US exports, weakening the economy. GMOs, genetically modified organisms make up nearly 2/3 of soybeans. Politicians in foreign countries have campaigned to the public, instilling fear in their US imported GMOs. In mid January, China

The demand curve shifts leftward, decreasing from D1 to D2, equilibrium price decreases from P1 to P2 and equilibrium quantity decreases from Q1 to Q2. A product such as Soybean, much grown from GMO seeds, has taken a beating from GMO concern. China’s ban has decreased the market demand of soybeans considerably. In the U.S. market, this decrease of exports has contributed to the United States’ weak economy because exports are an injection to the circular flow. China’s ban on GMOs along with other foreign countries concerns about GMOs has caused a large decrease in foreign buying of US soybeans. The decrease in injections has caused a decrease in aggregate demand causing aggregate price and aggregate quantity of soybeans to fall to record lows.

The second major factor to impact the market for soybeans was a drought. Dry summer weather impacts crop development. “Compared with last year, soybean production will be down 9 percent, resulting in the smallest soybean crops since 1995 – 96” (Barone, 1). The decrease in rain caused a decrease in resources which is a determinant of supply. The decrease in resources shifts the supply curve left as shown below:

In April, 2002, the demand for soybeans began to increase again due to China’s announc

Some topics in this essay:
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