February 12 – How Are Chinese Soybean Buyers Dealing With Import Requirements?

Chinese soybean buyers have been the key demand factor in U.S. soybean prices.

Could a China soybean ban hit U.S. farmers this marketing year?

China has been the key demand factor in U.S. soybean prices heading into the February WASDE report. The question people are asking is whether a China soybean ban for U.S. producers could hit the markets.

Let’s look at a major revelation about the impact of U.S-Chinese trade in this marketing year…

Trade problems between the U.S. and China have accelerated over the last few months. The U.S. is putting heavy tariffs on washing machines and solar panels. China is investigating whether U.S. subsidies on sorghum are hurting Chinese farmers.

But now China is looking at the impact of trade measures on soybean imports from the U.S. China has already turned more and more away from the U.S., choosing Brazil as its exporter of choice.

The reason has been tied to Brazil’s better protein quality.

But the ongoing trade feud between Brazil and the U.S. can become a larger deterrent.

At 97 MMT, China dwarfs the rest of the world’s soybean trade. So, it was concerning that the country didn’t invite the U.S. Soybean Export Council to discuss broader trends in the ag sector with other import and export groups.

According to the Council, China’s agricultural ministry is now “researching the implications on China and the Chinese crushing industry in the event U.S. soybeans have restricted market access.”

While “restricted market access” might not mean a total China soybean ban, it could lead to a dramatic downturn in exports to the world’s largest market.

Though the country hasn’t made any announcement, this is a significant development. The Obama administration hit China with tariffs on tires in 2009.

As a result, China responded with tariffs on chicken feet. Eventually, the US would win a dispute at the WTO, but there’s one serious problem.

Poultry exports fell as much as 90% after those tariffs.

A China soybean ban is something U.S. soybean producers cannot afford.

 

China Studying Impact of Trade Measures Against U.S. Soy, Sources Say

China is studying the potential impact of trade measures imposed on soybeans imported from the U.S., valued last year at $13.9 billion, according to people familiar with the matter.

Speculation is mounting over China’s response to U.S. tariffs on imported solar panels and washing machines announced last month. The Ministry of Commerce has been looking into the consequences of measures against U.S. soybeans since January, according to the people, who asked not to be identified because the information hasn’t been made public. That includes anti-dumping and anti-subsidy probes, they said.
Commodities are particularly exposed to escalating trade tensions between the world’s biggest economies. China has already started an anti-subsidy and anti-dumping investigation into U.S. grain sorghum, less than two weeks after President Donald Trump announced tariffs on solar panels and washing machines.
The Ministry of Commerce held a meeting on Tuesday with some Chinese companies to get feedback, and no conclusions were reached, they said. Any final decision to take steps would be made by senior Chinese leadership.
 The ministry held meetings recently with some importers and exporters to analyze trends and problems in the agricultural sector, but said it wasn’t to do with U.S.-China trade frictions. Some companies raised the issue of trade and expressed concerns about the impact of agricultural imports, spokesman Gao Feng said at a press conference on Thursday.

The U.S. Soybean Export Council wasn’t invited to the meeting convened by the ministry with representatives from China’s importing and processing industries, Paul Burke, the Beijing-based North Asia regional director for the U.S. group, said in an email. The ministry “has been researching the implications on China and the Chinese crushing industry in the event U.S. soybeans have restricted market access,” Burke said. “No decisions were made or announced as to whether China will in fact restrict access.”

Soybeans on the Chicago Board of Trade were little changed at $9.8325 a bushel after declining 0.3 percent on Wednesday. Soymeal futures on the Dalian Commodity Exchange were little changed at 2,806 yuan ($444) a ton after climbing 1.5 percent on Wednesday, the biggest gain for the most-active contract since Dec. 6.

Record Imports

While China has already “handicapped” U.S. sorghum, soybeans would be “an order of magnitude larger,” Commonwealth Bank of Australia strategist Tobin Gorey said in an emailed report. Soybeans “are a major concern for a significant number of people who voted for the current U.S. President. Should U.S. soybeans become estranged from their largest customer then that will weigh on U.S. prices,” he said.

China’s soybean imports have climbed to a record as expansion in large-scale livestock farming and a shortage of protein-rich feed grains boost soy-meal consumption. While the U.S. counts China as its biggest soybean market, the Asian country last year bought more of the oilseed from Brazil.

Soybean imports totaled 8.48 million tons in January, according to customs data released Thursday. That’s 11 percent lower than December and up 11 percent from a year earlier.

 

 

H/T: Bloomberg
About the Author
Brennan Turner

Brennan Turner is the CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.