China’s soybean imports are set to see a considerable decline up to 25 percent in the last quarter of 2018, thanks to the nation’s tariff war with the U.S. and high domestic stockpiles both curbing buyers’ purchases.
Soybeans, which are used to make animal feed and vegetable oils with essential protein sources, have been at the front line of the tit-for-tat trade war between the world’s top two economies.
China in July imposed a retaliatory 25-percent import duty on U.S. soybeans in response to the pressuring tariff actions U.S. took against Chinese goods and soybean imports have been closely and constantly watched since then.
In September, China brought in 8.01 million tonnes of soybeans, down from 9.15 million tonnes in August and below last year’s 8.11 million tonnes, according to data released by the General Administration of Customs on Oct 12.
Chinese soybean importers, who take up 60 percent of global production, could import only 18 to 20 million tonnes of the oilseed in the fourth quarter, significantly down from around 24 million tonnes over the same period last year, Reuters quoted traders as saying.
The estimated decrease of 4 to 6 million tonnes in the last three months this year would be the biggest fall since at least 2006.
“Imports will average around 6 million tonnes per month in the fourth quarter,” said a Singapore-based trader at an international firm that operates oilseed processing plants in China.
“Purchases are going to be mainly from Brazil and some from Argentina and Canada. Buyers are not willing to take chances by bringing in U.S. beans,” the trader added.
The landed cost of U.S. soybean shipments to China is currently on par with Brazilian soybeans even delivered with the 25-percent tariff, but Chinese buyers are reluctant to take U.S. supply in the fear of authorities’ disapproval of cargoes and possibly further climbing tariffs.
“Right now China’s import duty on U.S. wheat is 25 percent, who knows, the duty might go up to 50 percent by the time your boat arrives,” said Ole Houe, head of advisory services at brokerage IKON Commodities in Sydney.
No Much Worries for China
China, which largely uses soy as protein source for feeding pigs and poultry, is unlikely to be in the lack of supplies despite the expected decline in imports for its abundant domestic reserves built up from a strong pace of imports.
“We will be fine until the end of February. For March, April, it’s a bit tight, but if demand is not so good, then we can probably even survive until then,” said a Chinese soybean trader who gave a forecast of 20 million tonnes for imports in the fourth quarter.
With customs data showing imports for the first nine months totaled 70.01 million tonnes, China’s soybean storage came in at 8.57 million tonnes this week, little slightly down from a record of around 9 million tonnes at the end of last week.