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Soybean giant Brazil swoops on US crop as China trade war punctures prices
South China Morning Post ^ | Updated : Saturday, 21 July, 2018, 3:37am | Keegan Elmer

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

Who’s 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 Trump’s 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 Washington’s 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.

It’s not just Brazil that’s 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, it’s just question of at what price,” he said. “It’s like a big game of musical chairs, but it’s not something you would draw up in an economics class as a model of efficiency, that’s for sure.” China’s 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, Brazil’s 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 can’t 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, we’re 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 everyone’s hands.”


TOPICS: Business/Economy; Extended News; US: Iowa
KEYWORDS: agriculture; argentina; brazil; china; pork; soybeans; tariffs; trade; transshipping; trumptrade
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1 posted on 07/25/2018 7:16:54 PM PDT by Red Steel
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To: Red Steel

Trump, you magnificent bastart...


2 posted on 07/25/2018 7:20:48 PM PDT by DoughtyOne (01/26/18 DJIA 30 stocks $26,616.71 48.794% > open 11/07/16 215.71 from 50% increase 1.2183 yrs)
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To: Red Steel
EU just promised to import more soybeans
3 posted on 07/25/2018 7:24:10 PM PDT by Chode ( We’re America, Bitch!)
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To: Red Steel
It is my understanding that, while Brazil is a major grower of soybeans, they consume much of their production domestically and have no huge surplus to export...
4 posted on 07/25/2018 7:28:09 PM PDT by ExSES (the "bottom-line")
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To: Red Steel

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?


5 posted on 07/25/2018 7:30:12 PM PDT by central_va (I won't be reconstructed and I do not give a damn)
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To: Red Steel

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.


6 posted on 07/25/2018 7:30:29 PM PDT by lurk
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To: ExSES

Not sure about soy, but Brazil turns a lot of crops into ethanol.


7 posted on 07/25/2018 7:31:13 PM PDT by central_va (I won't be reconstructed and I do not give a damn)
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To: Red Steel
Most of the smart farmers signed contracts early on in the process and are still getting $10/bushel.
8 posted on 07/25/2018 7:31:42 PM PDT by deweyfrank (Nobody's Perfect)
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To: lurk
Farmers a less than 1% of the workforce and they are over represented in government IMO.

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?

9 posted on 07/25/2018 7:33:36 PM PDT by central_va (I won't be reconstructed and I do not give a damn)
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To: Red Steel

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.


10 posted on 07/25/2018 7:34:07 PM PDT by montag813
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To: central_va

Domestically they get crushed if Xi goes through with the tariff. They are going to feel it.


11 posted on 07/25/2018 7:35:13 PM PDT by Red Steel
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To: montag813
Stay away from soy beans and anything related to them. Read up on them and you will be surprised about their negative health implications, too many to enumerate here.
12 posted on 07/25/2018 7:37:46 PM PDT by Fungi
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To: lurk
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.

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.

13 posted on 07/25/2018 7:37:59 PM PDT by Vince Ferrer
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To: deweyfrank

Farmers can’t make it on $10 soybeans. Breaking even at best.


14 posted on 07/25/2018 7:38:29 PM PDT by cornfedcowboy
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To: Red Steel
Domestically they get crushed if Xi goes through with the tariff. They are going to feel it.

Business pressholes never talk about that...

15 posted on 07/25/2018 7:38:30 PM PDT by central_va (I won't be reconstructed and I do not give a damn)
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To: cornfedcowboy
Breaking even at best.

Like the millions who lost their manufacturing jobs over the last 3 decades, they should retrain to be brain surgeons and software engineers.

16 posted on 07/25/2018 7:40:24 PM PDT by central_va (I won't be reconstructed and I do not give a damn)
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To: lurk

There’s $12 billion on tap to carry them over while they wrangle this out the last time I looked.


17 posted on 07/25/2018 7:43:22 PM PDT by Red Steel
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To: Red Steel

and not a penny for a wall.


18 posted on 07/25/2018 7:46:29 PM PDT by central_va (I won't be reconstructed and I do not give a damn)
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To: central_va
Heck, I'm waiting for meat prices to tumble so that I can stock up my fridge!! 😁
19 posted on 07/25/2018 7:53:19 PM PDT by RoseofTexas
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To: central_va

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.


20 posted on 07/25/2018 7:53:39 PM PDT by Red Steel
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