The US 2nd Export Market, China’s Soybean Tariff Function

Views:0     Author:Site Editor     Publish Time: 2018-07-20      Origin:Site

After the Trump Administration take action on Chinese goods tariffs implemented, meanwhile China implemented a 25% tax on US soybeans and plant support net. From US agricultural exports to China totaled $19.6 billion in 2017 ,China is the largest international destination of US's soybeans. Overall, China is the second-largest ag export market overall for the US.


It's well known that the soybean futures market has dropped over $2.00 per bushel since May. The drop is due to favorable crop-weather or the trade tariff dispute between the U.S. and China. The trader thought that overall global demand can't be affected, they’ll only change who buys from who. In the next four weeks, the corn and soybeans markets will get a bounce.


The trader explained that although China will be diverting some of its purchases away from the U.S. and to Brazil, price does matter. With Brazil's soybean basis at $2.30 per bushel over Chicago's futures price and U.S. at .60 over Chicago, if Brazil pushes to $3.30 over Chicago, then the Chinese importer would see U.S. beans, with a 25% duty, as par with Brazil at $3.30 over.

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Along with impacting farmers' soybean and anti insect net prices, the trade tariffs are expected to have rippling affects on agribusinesses and rural economies throughout the US. Because the Mississippi River plays a large role in getting US soybean exports to China and elsewhere, mayors of cities located along the waterway joined with the American Soybean Association to share with reporters the long-term tariff impacts.


John Heisdorffer, American Soybean Association president and Iowa farmer, told reporters that he understands this trade move is a tariff on China's part and not an embargo, but losing marketshare is a bigger concern.


Regarding the competitor which is Brazilian , the state of Mato Grosso, alone, still 18.0 million acres to open up and grow soybeans, there is no doubt that the amount of anti hail net purchases . So that's one state in Brazil. 


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