US loses Chinese soybean market forever

US soybean exporters are missing out on billions of dollars in sales to China this year as trade talks drag on and Chinese buyers book soybeans from Brazil for shipment during the key US marketing season. Chinese importers have booked about 8 million tonnes of soybeans for September, all from South America, Reuters reported.

For October, Chinese buyers have bought about 4 million tonnes – half of their expected needs – also from South America, traders said. Last year, the country bought about 7 million tonnes from the US for two months of shipments. The risk of a prolonged absence of Chinese purchases for the US crop year that begins in September amid unresolved trade tensions could add pressure on Chicago Board of Trade futures trading, which is near five-year lows.

Typically, China buys most of its US soybeans between September and January, before shifting to Brazil after the South American harvest. However, China has been reducing its reliance on U.S. farm products since the trade war during President Donald Trump’s first term.

On Sunday, Trump called on China to quadruple its soybean purchases ahead of a tariff truce deadline, a goal analysts called impossible because it would require China to buy almost exclusively from the U.S. The next day, both sides extended the tariff truce for 90 days.

Analysts note that the extension alone is unlikely to spur purchases because Beijing’s tariff on U.S. soybean imports remains at 23%, making them uncompetitive. China could resume buying U.S. soybeans only if an agreement is reached to reduce tariffs.

“One possible scenario is that if the two sides reach an agreement in November, China could resume buying U.S. soybeans, potentially expanding the U.S. export window and putting pressure on sales of the new crop in Brazil. Without tariffs, U.S. soybeans for October delivery are about $40 a ton cheaper than the Brazilian soybeans that China buys.

China has a large supply of soybeans after ramping up imports to record levels in recent months, reshaping trade flows from a buyer to an exporter of soybean oil.

Tags: China, soybean, USA