Skip to comments.Soybean giant Brazil swoops on US crop as China trade war punctures prices
Posted on 07/25/2018 7:16:54 PM PDT by Red Steel
Non-Chinese buyers cash on American supplies to feed demand in their own countries, analysts say
Whos winning the US-China trade war? When it comes to soybeans, the answer is Brazil. The South American nation is capitalising on the strife caused by US President Donald Trumps trade war to profit from both China and America in soybean trade.
China has been the biggest buyer of US soybean in recent years, but as imports have become caught up in Beijing and Washingtons tit-for-tat tariffs, Chinese purchasers are now looking to to Brazil to make up the shortfall.
As a result, US soybean prices have fallen by 20 per cent since April to their lowest price in nearly a decade, while the Brazilian crop is being sold at a premium, according to industry watchers.
At the same time, Brazil and Argentina, another major soybean grower, have snapped up some of the cheap US supplies for their domestic markets, according to Grant Kimberley from the Iowa Soybean Association.
There have been purchases from Brazil and Argentina to back fill their own domestic industries, he said.
Its not just Brazil thats buying the surplus American soybeans, however; US sellers have also reported unusually high sales in non-traditional markets across Europe, the Middle East and Southeast Asia.
In the end, the beans are going to move someplace, its just question of at what price, he said. Its like a big game of musical chairs, but its not something you would draw up in an economics class as a model of efficiency, thats for sure. Chinas soybean imports forecast to fall as tariffs hit and buyers switch to other animal feed
China, which imports 60 per cent of the soybeans traded worldwide, bought 32.9 million tonnes from the US last year, accounting for 34 per cent of total purchases.
That total is forecast to drop by 6.8 million tonnes for the 2018/19 crop year, according to the US Department of Agriculture.
In contrast, Brazils exports to China were on the rise, increasing to 8.2 million tonnes in June from 6.6 million tonnes at the same time last year, said Arlan Suderman, chief commodities economist for New York-based commodity trading and risk management services provider INTL FCStone.
Suderman said Brazilian soybean was about 20 per cent more expensive than the US product and Chinese processors would have to decide whether to pass the extra cost on to consumers.
They will have to either absorb the increased cost, pass them along to the livestock producers utilising the soy meal and food companies utilising the soy oil, be subsidised by the government, or some combination. In the end, the Chinese crush and livestock industries are paying a steep price, he said. Why China cant count on Brazil to fill the soybean gap in its trade battle with the US
US farmers are also worried about the upcoming harvest. Chinese buyers have accounted for just 17 per cent of all advanced purchases of the autumn US soybean crop, down from an average of 60 per cent over the past decade, according to Reuters.
With each day, were that much closer to the combines rolling, and the longer this goes, the more anxiety will intensify, Iowa Soybean Association spokesman Aaron Putze said.
Although the clock is ticking, the prevailing sense among farmers is that this is going to get worked out. But [the administration of US President Donald Trump] is a different kind of administration, that is not conventional, and so people are biding their time. How the China-US trade row might pave the way for the soybean Silk Road
US soybean exporters say while they did not expect a resolution in the near future, both US sellers and their Chinese buyers were eager to get back to business.
Our Chinese partners have told us they are hopeful that this gets resolved in a reasonable period of time, and that they want to resume normal trading, but their hands are tied too, Kimberley said.
This is a government-to-government, and a political issue, that is out of everyones hands.
Trump, you magnificent bastart...
Don’t care. What about the strife in Gookland due to higher food prices due to the import tariff? Will your leader for life survive?
We were just in Nebraska. Farmers there are anticipating a loss of a lot of money in the short run. They still lean in favor of Trump, but this has them feeling nervous.
Not sure about soy, but Brazil turns a lot of crops into ethanol.
I never heard ANYONE complain when textiles were off shored and hundreds of towns in the south were turned into ghost towns. Where were the lamentations then?
Great, now Brazilian sperm counts can drop as well. SO stupid for men to eat soy. But it’s in nearly everything these days. Have to read labels like never before.
Domestically they get crushed if Xi goes through with the tariff. They are going to feel it.
Someone will buy the soybeans, US buyers, the Chinese, or the Europeans. If Brazil is smart, they will buy the soybeans and sell them to China with a markup. Hopefully the tariff will be just slightly less than what it would take someone like the Germans to buy a lot of soybeans and ship it to Germany, then by rail through Russia to China.
Farmers can’t make it on $10 soybeans. Breaking even at best.
Business pressholes never talk about that...
Like the millions who lost their manufacturing jobs over the last 3 decades, they should retrain to be brain surgeons and software engineers.
There’s $12 billion on tap to carry them over while they wrangle this out the last time I looked.
and not a penny for a wall.
Yeah too bad Trump can’t unilaterally get the money for the wall. Senator Grassley publically lamented that Trump has ‘too much power’ in the area of tariffs, et cetera.
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