Published: Mon, July 16, 2018
Money | By Ralph Mccoy

Trade Wars: China to import less soy first time since 2004

Trade Wars: China to import less soy first time since 2004

Beijing retaliated with in-kind tariffs on American products, including soybeans.

China buys two-thirds of the world's soybean exports and, historically, more than half of USA soybean shipments, worth $12.25 billion past year.

Even Brazil, the world's top soybean exporter, is prepping for major purchases of USA soybeans to feed its domestic processors as it diverts more of its own crops to China at premium prices, according to exporters association Anec.

CNGOIC reported that the soybean planting area in the United States reached 36.24 million hectares this year, the second-highest level in history, with the planting area exceeding that of corn for the first time in 40 years.

It also comes as demand for soymeal has already been hit by losses in the pig farming sector, the report said.

"The tariff that China recently imposed on USA soybeans is expected to cause higher prices for soybeans in China", said USDA analysts in the monthly WASDE report.

USA farmers are expected to harvest 4.31 billion bushels, up 30 million bushels from 2017, according to USDA's National Acreage Statistics Service or NASS.

Soybeans are down 14.7% over the past year.

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"The soybean prices have dropped over 20 percent since the talk of these tariffs began", Beam says.

President Trump has vowed to protect farmers from unfair Chinese retaliation, though the administration has declined to spell out the assistance it might provide.

Since late March, almost 258 million bushels - 50% more than usual - have been shipped to markets outside of China at the same time that Beijing has canceled contracts for US soybeans. They are instead loading up on Brazilian soybeans, which now sell at a premium of up to $1.50 a bushel as US soybean futures have fallen 17 percent over six weeks to about $8.50, their lowest level in almost a decade.

With South American soybeans selling at a premium because of Chinese demand, importers in other countries have bought US soybeans at comparative bargain prices in recent weeks.

Soybean futures for November delivery fell as much as 1.3% to $8.385 (about R110) a bushel in Chicago on Friday.

The ministry's Chinese Agricultural Supply and Demand Estimates (CASDE) report said the new tariffs on USA shipments introduced would inflate prices of the oilseed.

"Soybean production has more than tripled from 35,000 tonnes in market year 2011-12", the report said.

No. 3 exporter Argentina has also bought US soy to supplement its own drought-stricken crop.

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