Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  News  >  Commodities

News : Commodities

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance ProfessionalsCalendarSectors 

U.S. Soybean Farmers Fear China Will Retaliate for Steel Tariffs

share with twitter share with LinkedIn share with facebook
share via e-mail
0
03/07/2018 | 04:15pm CEST

By Benjamin Parkin and Jesse Newman

China's appetite for U.S. soybeans has waned, and concerns abound that exports of the legume could suffer further if President Donald Trump makes good on a promise to impose tariffs on imports of steel and aluminum.

Farmers and grain traders are nervous that China might retaliate by slowing imports of U.S. beans or by erecting trade barriers to them. Chinese officials in February said they would investigate whether the U.S. subsidizes sorghum exports to the country after the Trump administration slapped tariffs on goods like solar panels that are manufactured by Chinese companies.

The American Soybean Association, a trade group, said Chinese officials in Washington, D.C. told its leaders that soybeans also could face scrutiny. Retaliation "would be devastating to U.S. soy growers," said John Heisdorffer, the association's president.

Soren Schroder, chief executive of White Plains, N.Y.-based Bunge Ltd., the world's largest soybean processor, said in February that he hoped tension between Washington and Beijing dies down. "It's better that calm minds figure out good things," he said. "There is a lot of noise and some disruptions in the supply chains coming out of the U.S."

China's demand for soybeans -- crushed into feed for pig herds or juiced for cooking oil -- remade global agricultural markets over the last quarter century. Today China buys 100 million tons annually, some 60% of the global trade. Around 30 million tons come from the U.S. in a typical year.

U.S. farmers hoping to tap that market are growing more soybeans than ever. Many planted soybeans in fields long used for corn and wheat after prices for those grains dropped in recent years. Soybean acreage is on track to match corn this year for the first time in 35 years.

But China is buying fewer U.S. soybeans, thanks to bumper harvests of cheaper beans in South America.

Brazil exported more soybeans than ever last year after a bumper harvest, almost 80% of them to China. Limited storage capacity forced many Brazilian farmers to sell at low prices, analysts said. Many Chinese crushers also prefer the higher protein content of Brazilian beans. Brazil's soybean exports to China more than doubled from September to January while U.S. sales to China dropped more than 20%.

"We have a serious competitor on our hands," said Matt Boucree, president of Blue Water Shipping Inc., in Metairie, La., which helps exporters load grain and soybeans onto vessels at U.S. ports. Mr. Boucree said his company has considered expanding into South America to capture some of the business that has moved there.

There aren't enough soybeans in the world for China to avoid buying from U.S. farmers entirely, grain traders say. A drought in Argentina, the top exporter of soybean meal, has threatened crops there. That has pushed soybean prices to their highest in more than a year and prompted a small uptick in demand for U.S. supplies.

"Big consumers are fearful of what's happening in Argentina and thinking they need to be covered and politics be damned," said Bill Nelson, senior economist at Doane Advisory Services. "Somehow they've got to get the beans."

The White House proposal for tariffs on steel and aluminum has nevertheless exacerbated concerns about retaliation, according to research firm AgResource Co. Even if China couldn't avoid the U.S. altogether, the firm said, it could buy exclusively from Brazil for the next six or seven months.

Other headwinds for U.S. soybean farmers are strengthening. U.S. officials said they would start labeling soybean shipments to China that contain more than 1% of detritus like weed seeds, to conform with Chinese requirements. That could subject those shipments to extra vetting or cleaning at Chinese ports, potentially creating delays traders say could make them less attractive to Chinese buyers.

The USDA said it wasn't aware of any shipments delayed or rejected because of the new rules, which it said would be reviewed after a year.

"It's just one more factor that has contributed to the relative uncompetitive nature of U.S. soybeans," said Ken Morrison, a trader and commodity newsletter author.

Write to Benjamin Parkin at Benjamin.Parkin@wsj.com and Jesse Newman at jesse.newman@wsj.com

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news "Commodities"
04:14aOil prices rise as markets tighten ahead of Iran sanctions
RE
03:57aOil prices rise as markets tighten ahead of Iran sanctions
RE
03:35aCOSMO ENERGY : Japan's Cosmo Oil replaces Iran oil with other Mideast supplies
RE
03:34aAsian shares wobble as China halts trade talks with US; oil rallies
RE
03:31aAsian shares wobble as China halts trade talks with U.S.; oil rallies
RE
03:25aS&P GLOBAL : Platts to consult on dated Brent crude price assessment
RE
03:12aBARRICK GOLD : is in late-stage talks to buy Randgold Resources- source
RE
01:33aBARRICK GOLD : is in late-stage talks to buy Randgold Resources -source
RE
09/23Oil Producers Signal Confidence in Managing Supply Disruptions -- update
DJ
09/23Correction to Oil Producers Signal Confidence in Managing Supply Disruptions
DJ
Latest news "Commodities"
Advertisement