China’s Soybean Tariff Impact Yet to be Seen

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The United States’ (US) soybean industry has expressed fears over lost revenue due the prospect of Chinese retaliatory trade tariffs. Chinese imports accounted for 57.3 percent of US soybean exports in 2017, and between 2000 and 2016, the export value of US soybeans to China increased from $2.3 billion to $40 billion. This rapid increase is attributed to China’s ramped up demand for livestock feed products. A study by the University of Tennessee Institute of Agriculture projects that with every one percent increase in the price of US soybeans to China, exports will decrease by 1.3 percent, making room for more Brazilian imports. If China imposes a 25 percent soybean import tariff, the study projects that the US will lose as much as $7.7 billion in export revenue.

However, it’s important not to be too alarmed at this stage. Historical global soybean export cycles clearly show that imports of US volume to China begin in mid-August. As expected, Brazil will supply China with soybeans through the end of July. With potential farm-gate losses ranging from $0.33 to $1.76 per bushel, farmers should still be concerned, but the full impact won’t be felt for another couple months. Gro Intelligence can provide subscribers with the data and analytics necessary to keep up with global soybean markets during ongoing trade uncertainties.

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