Chinese soybean import forecast cut in face of trade war

China on Thursday cut its forecast for soybean imports for the 2018/19 crop year, warning that higher prices due to the trade conflict with the US would curb demand as farmers switch to alternative ingredients for their animal feed.

Imports of soybeans in the crop year that starts on October 1 will be 93.85 million tons, down 1.8 million tons, or 2 percent, from last month’s estimate, the Ministry of Agriculture and Rural Affairs (MOA) said in its monthly crop report.

That compares with its estimate of 95.97 million for the 2017/18 crop year and, according to US government records, would be the lowest import level since 2016/17.

China on July 6 imposed 25 percent tariffs on $34 billion worth of US goods, including soybeans, in response to US duties imposed the same day on Chinese products worth a similar value.

The ministry’s Chinese Agricultural Supply and Demand Estimates (CASDE) report said that the new tariffs on US shipments introduced would inflate prices of the oilseed.

That means that crushers, who make meal and oil from the beans, will turn to other sources of protein, the ministry said.

That could be good news for producers of rapeseed, peanuts or sunflower seeds.

It also comes as demand for soymeal has already been hit by losses in the pig farming sector, the report said.

The extra tariffs are expected to push up China’s soybean import costs by 100 yuan ($14.95) per ton from the previous month’s forecast, the CASDE report said.