China market not buying as many soybeans as Trump said

China, the world’s top soybean buyer, may not immediately import the amount of soybeans the US wishes, even if ChinaUS trade negotiations progress, due to trade friction uncertainties and a lack of domestic demand for soybean meal, industry analysts and traders predicted on Wednesday.

US President Donald Trump said Tuesday that China was buying a “tremendous amount” of US soybeans and that trade talks with China were already underway by telephone, Reuters reported on Wednesday.

But traders in Chicago said they have seen no evidence of a resumption of such purchases, the report said.

In response to the trade dispute the US initiated against China earlier this year, China decided in June to levy a 25 percent tariff on certain US agricultural products including soybeans and pork.

“The US soybean purchases almost ended at our company when the tariffs were imposed in July,” a purchase manager at Xiamen Zhonghe Industry, who asked to remain anonymous due to the sensitivity of the issue, told the Global Times.

“Currently, Brazil's imported soybeans are adequate and we are also planning to import from Argentina.”

An employee at an international food and oil trader, who also asked to remain anonymous, said the company would likely wait rather than immediately buy US soybeans.

Imports of soybeans on the Chinese market have dropped since the tariffs were first implemented.

“There are still some uncertainties at the political level. What if Trump cannot keep his word after the 90 days of talks?” the employee told the Global Times on Wednesday.

“What if the products cannot get efficient customs clearance when arriving at China's ports? Risks still exist.”

Chinese President Xi Jinping and his US counterpart Trump agreed on the sidelines of the G20 meeting in Buenos Aires to engage in 90 days of trade talks to ease bilateral tensions.

They agreed not to impose additional tariffs and to step up negotiations toward the removal of all additional tariffs. The aim is to reach a concrete, mutually beneficial deal.

“Most enterprises will take a wait-and-see attitude toward the market as the trade talks progress on soybeans because of Trump's frequent voltefaces,” said Jiao Shanwei, editor-in-chief of grain portal cngrain.com in Henan Province.

According to a report by China Newsweek in November, Chinese imports of US soybeans fell 3.61 million tons between January and August, a 31.7 percent year-on-year drop. Nearly 70 percent of China's imported soybeans came from Brazil in that period.

The slowdown in US soybean exports has had an impact on US ports. Soybean exports out of the Mississippi River are down 36 percent, or 85 million bushels, from prior-year levels, data from the American Farm Bureau Federation showed in October.

Weak demand

Jiao said that US companies usually supply their soybeans in the fourth quarter and the first quarter.

“Most Chinese importers placed orders for Brazilian soybeans before July when the tariff took effect and that period turned out to be the right time for Brazilian soybeans to enter the market. So they bought a lot for later processing,” Jiao said.

The US Department of Agriculture projected that Chinese began stockpiling soybeans for the 2018-19 financial year at 825 million bushels: approximately 70 percent of the volume of US soybean shipments to China during all of the 201718 business year, according to a report released on Tuesday.

Less reliance on soybean meal for pig feed and less pig breeding caused by the African swine fever epidemic are other key factors in the sluggish demand for soybeans, experts noted.

The China Feed Industry Association has been seeking to cap crude protein and soybean meal content in pig feed in a bid to reduce soybean imports amid the China-US trade dispute.