Tags: china | soybean | tariff | food

Report: China May Have to Resume US Soybean Purchases in Weeks

Report: China May Have to Resume US Soybean Purchases in Weeks

Man selling different varieties of tofu in a market in Kunming, China (Outcast85/Dreamstime)

Tuesday, 07 August 2018 09:32 AM

China may have to start buying U.S. soybeans again in coming weeks despite the trade war between the two countries as other regions cannot supply enough soybeans to meet China’s needs, Hamburg-based oilseeds analysts Oil World said on Tuesday.

In July, China imposed import tariffs on a list of U.S. goods, including soybeans, as part of the trade dispute with the United States. China is the world’s largest soybean importer and has been seeking alternative supplies, especially in South America, where supplies available for export are down.

“China has to resume purchases of U.S. soybeans,” Oil World said in its latest newsletter. “The South American supply shortage will make it necessary for China, in our opinion, to import 15 million tonnes of U.S. soybeans in October 2018/March 2019, even if the current trade war is not resolved.”

Chinese purchases of U.S. soybeans could re-start “in coming weeks,” Oil World added.

Soybeans, crushed to make cooking oil and the protein-rich animal feed ingredient soymeal, were the biggest U.S. agriculture export to China last year at a value of $12.3 billion, according to the U.S. Department of Agriculture.

Oil World said with South American export supplies expected to be down sizeably from a year earlier in the next six months, China will face very tight domestic soybean supplies unless it resumes large-scale purchases of U.S. soybeans.

“There is a risk that China will have to cut back its livestock production, implying higher prices on the domestic market,” it said.

China is also likely to raise imports of processed soymeal as an alternative to soybeans for crushing, it said. Ironically this could mean China could still end up with U.S. soybeans that have been processed in Argentina.

“The biggest increase is likely to be seen in soymeal exports from Argentina to China," it said. "If China begins purchasing Argentine soymeal, a lack of soybean supplies in Argentina is likely to raise Argentine imports of U.S. soybeans.”

© 2019 Thomson/Reuters. All rights reserved.

   
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China may have to start buying U.S. soybeans again in coming weeks despite the trade war between the two countries as other regions cannot supply enough soybeans to meet China's needs, Hamburg-based oilseeds analysts Oil World said on Tuesday.
china, soybean, tariff, food
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2018-32-07
Tuesday, 07 August 2018 09:32 AM
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