- In March and April, China imposed tariffs on US soybeans in response to President Donald Trump’s tariffs on $US50 billion worth of Chinese goods.
- Soybeans are an important US agricultural export, and a majority of those exports go to China.
- Soren Schroder, CEO of oilseed processor Bunge, told Bloomberg that China is “very deliberately not buying anything from the US.”
- The drop off in Chinese purchases of US soybeans is worrying for US farmers.
- It shows the trade war between the US and China is heating up.
China is signalling that it won’t back down from a trade battle with President Donald Trump and the US.
In an interview with Bloomberg, the CEO of one of the largest soybean processors in the world said China has effectively ended purchases of US soybeans – a critical export crop.
Soren Schroder, CEO of oilseed processor Bunge, told Bloomberg that Chinese purchases of US soybeans have all but vanished.
“Whatever they’re buying is non-US,” Schroder said. “They’re buying beans in Canada, in Brazil, mostly Brazil, but very deliberately not buying anything from the US.”
The reason for the decline, Schroder said, is the recent 25% tariff the Chinese government applied to US soybeans. That tariff came in response to Trump’s decision to impose tariffs on $US50 billion worth of Chinese goods.
The apparent shift is bolstered by the fact that the current South American harvest season is in full swing, while the US harvest primarily comes in the back half of the year. But such an extreme drop off is notable.
Soybeans are an important agricultural export for US farmers, and China is the crop’s main destination. According to the US Department of Agriculture, 61.2% of total US soybean exports worth a whopping $US14.2 billion went to China in 2016. According to the USDA, soybeans are the most valuable agriculture export for the US, making up roughly 9% of all US exports by value.
Schroder’s comments appear to be indicative of a growing trend. An April 25 analysis by Reuters revealed that Chinese firms had not signed any new contracts to import soybeans in two weeks. Additionally, large shipments of soybeans from the US to China were diverted after the tariff was announced.
Jim Sutter, CEO of the US Soybean Export Council, told the agriculture data firm DTN that Chinese buyers are reluctant to invest in US goods because of the tariffs.
“Our exporters are not making any new sales of soybeans to China,” Sutter said Tuesday. “The tariff situation has created a lot of uncertainty, both in the minds of U.S. sellers, but particularly in the minds of Chinese importers. They don’t want to make a purchase, and you are sailing towards them and then have something happen and they arrive in China subject to a 25% import tariff.”
Bloomberg also found that China canceled US soybean contracts totaling 62,690 metric tons between April 5 and April 19.
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