China Turns to Argentina for Soybeans
China is buying significantly more soybeans from South American counties as imports from the U.S. dwindle amid a prolonged trade war with Washington that has lasted more than a year.
In the first half of 2019, China imported 2.4 million tonnes of soybeans from Argentina, 10 times more than in the same period last year. At the same time, China’s total soybean imports dropped 11.2% year-on-year in the first seven months of this year to 46.9 million tonnes, according to Chinese customs data.
China stepped up soybean imports from counties like Argentina and Brazil since last July when Beijing slapped 25% tariffs on a list of U.S. products including soybeans in response to Trump administration tariffs on Chinese goods, bringing U.S. soybean shipments to a virtual halt.
China accounted for 60% of U.S. soybean exports before the trade dispute. American soybean sales to China in the 2018-2019 season, which started last September, dropped to the lowest level in 11 years, and more than a quarter of those sales have yet to be shipped, data from the U.S. Department of Agriculture showed.
As President Donald Trump threatened to impose more tariffs on Chinese goods, countries including Brazil, Uruguay and Argentina made clear moves to woo the world’s top buyer of soybeans.
Although China has not signed a free-trade agreement with Argentina, China did open its market and lower barriers, and Argentine products have shown competitiveness in the Chinese market, said Diego Ramiro Guelar, Argentine ambassador in Beijing.
At a recent soybean trade forum hosted by the Argentine embassy in Beijing, Argentine representatives said they expect to sell more soybeans and by-products to China.
Last year as Argentina’s soybean harvest declined sharply because of a severe drought, more than 90% of the country’s soybean exports went to China. Shipments are expected to increase this year as production recovers. Argentina’s coming harvest is expected to reach 56 million tonnes, up nearly 50% from the previous season. Of that total, 9 million tonnes are up for export, an increase of 140% from a year ago, according to Argentina’s Rosario Grains Exchange.
In addition to soybeans, China is looking into buying processed soybean meal, the residue left from soybeans after oil extraction.
China is the biggest consumer of soymeal used as animal feed. But Chinese buyers usually prefer to import raw soybeans and produce the meal locally.
As the trade war with the U.S. disrupts supplies, Chinese feed producers are actively seeking alternatives. Some Chinese companies have started to set up soymeal crushing plants in Brazil.
Earlier this week, a Chinese delegation visited Argentina to inspect soymeal crushing plants, Argentine local media reported. An Argentine trade delegation is scheduled to visit China in September, aiming to seek China’s approval for soymeal imports from Argentina.
Argentine Ambassador Guelar confirmed the visit, saying he expected a “promising future” for soymeal exports to China.
To mitigate soybean supply risks, China is also exploring ways to adjust its consumption structure, which has relied on soybeans to satiate its massive population’s ever-growing demand for protein.
The Chinese government is advocating diversified sources of cooking oil and animal feeds, reducing dependence on soybean-based products, an expert close to the Ministry of Agriculture told Caixin.
Contact Reporter Denise Jia (email@example.com)
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