With the threat of a trade war between the United States and China still looming, it appears China has ceased all purchases of soybeans grown in the U.S.
Soren Schroder, CEO of Bunge, one of the leading private exporters of soybeans globally, said in an interview that China is purposefully not purchasing the cash crop from U.S. suppliers.
While the New York-based international company has been able to use supplies from outside the U.S. to fill China-bound soybean shipments, Schroder maintained that the his company and the market at large would favor free trade over the current situation.
Chinese purchases of soybeans are currently being made predominately from Brazil, with the early spring season being when South American countries complete their harvests and see a significant uptick in agricultural exports. The United States Department of Agriculture expects that Brazil’s global lead on soybeans exports will expand to record levels in the 2017-2018 season.
While soybeans futures dropped on Wednesday in the wake of Schroder’s statement, it only did so by a single percent, and remains up eight percent for the year, reflecting both the market’s continuing confidence in the soybeans trade and its belief that the tensions between the United States and China are temporary.
In early April, the Chinese Ministry of Commerce, responding to the Trump administration’s proposed tariffs on $50 billion worth of Chinese goods, including steel, announced an equivalent retaliatory tariff on numerous American products, including numerous agricultural products such as soybeans, peaches, poultry, nectarines, pork, sorghum and corn. No effective date was announced, reportedly to allow for the possibility of negotiation. The move was followed up in late April by an announcement to terminate a net 62,690 metric tons of U.S. soybean purchases.
China is the second-largest market for U.S. agricultural exports, according to the USDA, as well as the world’s largest importer of soybeans. With areas such as Republican-voting Iowa and rural California being some of the country’s largest producers of the crop, it is possible that these tariffs are been specifically targeted to politically undermine the Trump administration.