You are here
China shunning US supplies of soya bean amid trade tensions
[CHICAGO] The world’s biggest oilseed processor just confirmed one of the soya bean market’s biggest fears: China has essentially stopped buying US supplies amid the brewing trade war.
“Whatever they’re buying is non-US,” Bunge Ltd chief executive officer Soren Schroder said in a telephone interview Wednesday. “They’re buying beans in Canada, in Brazil, mostly Brazil, but very deliberately not buying anything from the US.”
In a move that caught many in US agriculture by surprise, China last month announced planned tariffs on American shipments of soya beans. As the market waited for the measure to take effect, there was some hope among traders and shippers alike that relations between the nations could ease in the meantime and the trade flow would continue. But that doesn’t seem to be the case, at least for now, according to Bunge.
It’s “very clear” that the trade tensions have already stopped China from buying US supplies, Mr Schroder said. “How long that will last, who knows? But so long as there is this big cloud of uncertainty, that’s likely to continue.”
Price volatility in farm goods has picked up in recent weeks as the saber-rattling between the US and China intensifies. Other agricultural products caught up in the dispute include corn, pork and sorghum. Soya beans are the second-largest American crop and prices are heavily dependent on trade with the Asian nation, the world’s top importer.
In the two weeks ended April 19, China canceled a net 62,690 metric tons of US soya bean purchases for the marketing year that ends Aug 31, US Department of Agriculture data show. At this time of year, South American countries typically complete their harvests and become the dominant shippers for several months. Brazil’s lead on global exports is expected to widen to a record in the 2017-2018 season as it sells 73.1 million tons abroad versus 56.2 million from the U.S., the USDA estimates.
Bunge has still been able to meet Chinese demand by filling shipments with supplies from outside the US, Mr Schroder said. The company has a large presence in South America.
“I would rather say that we would prefer that free trade and no disruptions take place because it’s not good for anyone,” Mr Schroder said. “We are, by virtue of our footprint, in a very good position to deal with” the situation, he said.