Chinese canceling orders for soybeans
U.S. tariff threat raises concerns
WASHINGTON — With the threat of tariffs and countertariffs between Washington and Beijing looming, Chinese buyers are canceling orders for U.S. soybeans.
At the same time, farmers in China are being encouraged to plant more soy, apparently to help make up for any shortfall from the United States.
Beijing has included soybeans on a list of $50 billion of U.S. exports on which it has said it would impose 25 percent tariffs if the United States follows through on its threats to impose the same level of tariffs on the same value of Chinese goods. The U.S. tariffs could kick in later this month; China would likely retaliate soon after.
It can take a month or longer for soybean shipments to travel from the U.S. to China. Any soybeans en route to China now could be hit by the tariff by the time they arrive.
“The Chinese aren’t willing to buy U.S. soybeans with a 25 percent tax hanging over their head,” said Dan Basse, president of AgResource, an agricultural research and advisory firm. “You just don’t want the risk.”
Basse said that it has been roughly three weeks since China has made any major soybean purchases, an unusually long delay.
Some Chinese buyers might be showing support for their government in the trade dispute by turning away U.S. soybeans, Basse said. The dispute may also make it seem too risky to buy from the United States over the long run.
“The United States could lose the reliable supplier label that we’ve had these many years,” Basse said.
The U.S. ships about 35 million metric tons of soybeans to China a year, said John Baize, an economist for the U.S. Soybean Export Council. China usually imports about 100 million tons a year and can’t import enough from other countries, he said, to abandon the United States as a source.
“Where’s China going to buy its beans?” Baize asked.
That may be true in the short run. But Basse suggests that Brazil has enough land that could be used for soybean cultivation that it could soon mostly replace the United States as a supplier to China.
At the same time, China is looking more to its own farmers. Since China announced its potential tariffs on U.S. soy in April, the government has encouraged farmers to cultivate more soybeans. Beginning this month, Chinese farmers say, Beijing reduced corn subsidies and raised annual soybean subsidies.