Wednesday, May 9, 2018

Has China Really Stopped Buying U.S. Soybeans? (its complicated)

Following up on May 3's "It appears China has stopped buying soybeans from the US altogether because of trade fight":
Soybeans are used as a major food source for pigs and there are reasons to think China has hit "peak pork" so the country doesn't need as much feed, regardless of source. This is what we were getting at in last week's "China and Pigs and Soybeans: It's Complicated" although I am told I didn't explain the thinking as well as I should have. More after the jump....
From AgWeb, May 4:
The world’s largest oilseed processer alleges China has stopped purchasing soybeans from the United States but industry leaders say the statement is more complex.

According to Bloomberg, Bunge’s CEO Soren Schroder said this week China has essentially stopped buying U.S. soybeans due to trade spat with the United States.

The statement was made the same week delegates from the Trump Administration traveled to Beijing in an effort to smooth out trade tension between the two countries. In a tit-for-tat trade dispute, China is threatening to slap a 25 percent tariff on shipments of some U.S. commodities, including soybeans.
Industry experts say there is a dispute whether the sale is a reduction or a halt.

“There is certainly evidence that there is a decrease,” said Mike Steenhoek, executive director of the Soy Transportation Coalition. “There are differences of opinion whether it is more of a dramatic pull-back in purchasing or if it’s simply a reduction. Either way, that’s of concern to us. Certainly Bunge has very much a 30,000 foot perspective on this.”

“[China has largely] stopped purchasing U.S. soybeans for now,” said John Baize, president of John C. Baize and Associates, a consultant for the U.S. Soybean Export Council (USSEC). "They normally import very little now."

Baize says a shipment of 193,000 tonnes of U.S. soybeans were shipped to China the week ending on April 26.

The latest trade data released by the U.S. Department of Agriculture (USDA) shows China’s traders are already cancelling shipments of several agricultural commodities, including U.S. soybeans. According to the data, there were net reductions of 133,700 tonnes of U.S. soybeans to China for the week ended April 26. Part of the shipment was cancelled. Another 66,000 tonnes were redirected to Vietnam.

However, Both Steenhoek and Baize say it’s not unusual for China to reduce its purchases during this time of year. Historically, China purchases soybeans primarily out of South America since the crop is ready to be harvested.

“Last year, the U.S. exported 36.25 million tons of soybeans to China. Of that amount, only 3.3 million tons were shipped to China in April through August, the last five months of the marketing year,” said Baize....MORE