China’s soybean imports from Argentina spike amid trade tensions with US

Amid trade tensions with the US, China’s October soybean imports from Argentina increased nearly 29-fold to 959,936 mt from 33,200 mt last year, according to customs data.

The focus in China might turn to Argentinian soybeans, world’s third-largest soybean exporter, as Brazilian inventories are expected to deplete in the coming weeks, sources said.

China’s soybean imports from Brazil in October totaled 3.8 million mt, down 42% year on year and 20% on the month, the data showed.

Other major soy supplier in October was the US with 1.15 million mt, down 33% month on month, according to a Chinese customs report.

China’s total soybean imports in October fell 11% year on year and 24.5% on the month to 6.18 million mt, according to the General Administration of Customs report, as the African swine fever outbreak and US-China trade dispute continued, sources said.

Through the first ten months of 2019, soybean imports by China totaled 70.7 million mt, down 8% year on year, according to data released November 8.

China imports soybeans primarily for producing animal feed. Since the Asian giant has lost almost 40% of its pig population to the swine fever, the demand for pig feed has decreased simultaneously.

Despite the ASF impact, Brazilian soybeans accounted for 80% of the total Chinese soy purchases because of US-China trade tension. The tensions started in July 2018, when the Asian giant imposed retaliatory tariff on American imports, including soybeans. As a result, US soy exports to China fell 77% year on year in 2018-19 marketing year — which runs from September 2018 to August 2019 — to 6.7 million mt.

Despite several rounds of trade talks since December 2018, both sides have not managed to resolve the differences yet. However, as a goodwill gesture, China has issued some tariff-free quotas on US-origin beans since August, encouraging the local crushers to buy more US beans.

However, doubts remain over the pre-conditions set by the two sides before holding the trade talks. Trump administration wants China’s commitment in buying $40 billion-$50 billion worth of US-origin agro-products, including soybeans, which is highly unlikely as the Asian giant is facing demand slump because of ASF and economic slowdown, sources said.

The Xi administration has been asking for lowering of US tariff barriers, before the trade talks begin, which could be a difficult step for the Americans given the growing mistrust between the two nations.

China is world’s biggest soybean importer, accounting for 64% of global soybean purchases, while US is the second largest soy exporter behind Brazil.

As the trade tension continues unabated, China had turned to South American beans to fulfill the import demand.

Soybeans are one of the major cash crops in Argentina, the world’s third-largest soybean exporter, with an average shipment of 7 million mt in a marketing year – October 1 to September 30.

However, there are reports of Argentinian soybean trade slowing as agricultural policy uncertainty continues under the newly elected government, sources said.

Increased demand for domestic soybean crushing in Argentina might also put additional pressure on exports to China, sources said. Argentina’s soybean crushing industry is one of the world’s biggest as the country is a major soymeal and soybean oil exporter.

Domestic crushing in Argentina is projected to rise to 44 million mt, up 8% year on year, in the 2019-20 marketing year, according to the latest US Department of Agriculture report.
Source: Platts