The recent Chinese purchase of US soybeans made prior to US-China trade talks might only give the impression of reversing a claim made by Putin in November that the US had “given up” on the Chinese soybean market. In November 2018, soybean sales to China were down 94%. The net result will be profits for Russian agriculture and continued crippling of the US farm sector, now propped up with Depression era emergency funds.
Chinese importers made their third large soybean purchase from the United States in the last month on Monday, as officials from both countries meet this week for the first face-to-face talks since agreeing to a 90-day trade war truce on December 1, two traders with knowledge of the deals said.
Chinese state-owned firms bought at least three cargoes of US soybeans on Monday morning, or about 180,000 tonnes, the traders said.
One said the total was closer to 15 cargoes, or about 900,000 tonnes.
The soybeans will be shipped mostly from terminals in the Pacific northwest from January to March, with a smaller volume to be exported from US Gulf coast terminals, the traders said.
The current trade war truce agreed between China’s Xi Jinping and US President Donald Trump expires on March 1.
900k tons is a small fraction of a total market for US soybeans which has declined since the beginning of the Trump administration. Then there’s RU disinformation.
(November 2018) MOSCOW (Reuters) – President Vladimir Putin said on Wednesday that Russia would supply soy beans and poultry meat to China and that the United States had effectively given up on that market.
Putin was speaking at the Russia Calling annual investment forum.
Like other markets, Trump is doing more business for Russia than for the US, stimulating the production of eastern Russian soybeans and essentially making US tariff policy subsidize growth in Russian agricultural production.
According to the latest trading data from International Trade Centre (ITC), in 2016, the USA exported about $22.9 billion worth or equivalent of 57.8 million tons of soybeans to the global market, representing approximately 43.8% of the world’s total soybean supplies in that year, making it again the world’s largest soybean exporter. China has been the largest importer of soybean from the USA over recent decades; over 31 million metric tons of soybeans are exported to China every year, representing over 62% of the US total soybean exports per annum. Other major importers of the US soybeans include Mexico, Japan, Indonesia, and the Netherlands.
Figure 1 provides a comparison between U.S. and Brazilian soybean prices and it indicates that the Chinese tariff is having a negative impact on U.S. soybean prices. Since April 2018, the U.S. soybean price is on the decline while the Brazil price increases.
The initial responses are concerning as the trade shocks generated by the current US-China trade war is already leading to trade diversion, benefiting other soybean suppliers on the global market, such as Brazil and Argentina. Given Brazil and Argentina’s rapid expansion of their soybean sectors, US soybean producers are right to worry whether this short-term shift in trade patterns might establish itself in the long run, to the detriment of our soybean industry.
As stated elsewhere, Russia is taking advantage of Belt and Road initiatives as the US withdraws from selective markets, and as speculators will profit from the long-run demand expectations for China choosing alternative suppliers of soybeans.
China has purchased record amounts of soybeans from Russia in recent months amid trade tensions with the U.S., Bloomberg reported.
The world’s biggest soybean importer, China has nearly tripled its imports from Russia, according to Bloomberg. Russian trade data show the country sold 850,000 metric tons of soybeans to China between July 2017 and mid-May this year.
China is the second-largest market for U.S. agricultural exports.
While Russia’s soybean production makes up less than 1 percent of the amount China imports, the size of soybean plantings in eastern Russia could reportedly expand up to 20 percent in the next two to three years.
The growing trade war between the United States and China could benefit Russia’s agricultural giant RusAgro, CGTN reports. One of the country’s biggest agriculture companies says they are now targeting China as a key export destination.
According to RusAgro’s CEO, Maxim Basov, the company was about to sign its first direct contracts with China this year, after years of slow progress.
“In fact we had troubles exporting even soybean to China for the past couple of years. But this year we see a big difference,” Basov said.
He added that Russia’s geographical proximity to China is a big advantage since Russia can export to China in four different directions.
US soybean sales to China down 94 percent as Trump tariffs continue
Ag Sec Sonny Perdue said late last month that the Department of Agriculture will not extend into 2019 an up-to-$12 billion aid package that was announced to help farmers impacted by Trump's policies.@thehill pic.twitter.com/dP8gLYKkp7
— Jon Smyth (@JonSmyth01) November 6, 2018
Boy, this worked out just the way Putin wanted it to didn’t it? Single handily destroying the US soybean markets all while our farmers & families are suffering. Crops going to waste & other countries “winning”. Being the “best” certainly helped here.
— Imagirlee (@Imagirlee) January 8, 2019