Search Site   
News Stories at a Glance
Michigan soybean grower visits Dubai to showcase U.S. products
Scientists are interested in eclipse effects on crops and livestock
U.S. retail meat demand for pork and beef both decreased in 2023
Iowa one of the few states to see farms increase in 2022 Ag Census
Trade, E15, GREET, tax credits the talk at Commodity Classic
Ohioan travels to Malta as part of US Grains Council trade mission
FFA members learn about Australian culture, agriculture during trip
Timing of Dicamba ruling may cause issues for 2024 planting
Bill in Kentucky legislature could bring Kentucky its first vet school
Ag census: U.S. lost 142,000 farms, 20 million acres in five years
Indiana farmers make trip to Indonesia to talk soybeans
   
Archive
Search Archive  
   
Economist: Farmers may gain more markets if tariffs kick in

 

WASHINGTON, D.C. — Concerns about the impact of Chinese retaliatory tariffs on U.S. soybean exports are likely overblown, according to at least one agricultural market source.

Chinese officials have threatened a 25 percent tariff on U.S. soybean exports if the Trump administration follows through on a March announcement it may impose an additional 25 percent tariff on about 1,300 products from China, including iron, aluminum and steel. According to a summary from the Office of the U.S. Trade Representative, the U.S. products are worth $50 billion.

The issue of tariffs on soybeans netted publicity recently when a news report quoted Bunge CEO Soren Schroder saying China had stopped all its imports of U.S. soybeans, according to John Baize, an economist at the U.S. Soybean Export Council.

Technically, that is true, Baize said – but what Schroder didn’t say was that China doesn’t normally buy U.S. soybeans this time of year. China typically buys U.S. soybeans in the period of Sept. 1 through the end of March.

“If every soybean from Brazil went over to China, China would still have to buy 15 million tons from the U.S., if they’re going to meet their 100 million-ton quota,” Baize said. He noted that includes a case in which China buys as many soybeans as it can from other alternate export markets.

He added there is evidence the United States is sending more of its soybeans to Europe right now, because Europeans are anticipating that Brazil may sell more soybeans to China; they want to line up new markets now for fear of losing out on Brazilian soybeans.

According to a March report from Rabobank, If China Strikes Back, China’s ability to set tariffs on U.S. soybeans may be limited. Global excess soybean supplies available for export from major producing countries would not be able to compensate for an unexpected disruption of U.S. soybean flows to China, the report stated.

Brazil already exports up to 74 percent of its soybeans to China, and it won’t have the immediate capacity to meet new needs.

The report authors performed a sensitivity analysis and determined if China increases current tariffs and cuts its soybean imports by 100 million bushels, U.S. soybean farm prices would decline from current levels by around 4-5 percent in the “very short” run.

“We anticipate that prices will recover, as U.S. soybeans will remain competitive and will likely find other markets such as Mexico, which continues to expand its animal protein platform,” the report stated.

According to Baize, U.S. soybean growers might actually end up better off with tariffs, because it will lead to a more diverse market for their exports.

The report found that the greatest impact of tariffs on U.S. agriculture would be on pork, fruit and tree nut exports. A 25 percent tariff on U.S. pork exports to China would likely result in a 60 percent decline in exports in 2018. In the short run, cut-out, or wholesale, values may drop by 10-15 percent as a result. Domestic consumption and exports to Mexico may partially absorb this shock, the report said.

Tariffs on pork exports to China could limit the expansion of the U.S. pork industry. The report estimates a 25 percent tariff set in May would cause pork exports to decline from 300,000 tons (carcass weight) to about 120,000 tons; however, hog production would not change materially.

“Under this scenario, the pork industry will have to seek alternative markets through reduced prices to accommodate 180,000 tons in excess supplies,” the report said. “As a result, cut-out values may have to come down around USD $10 a head to USD $15 a head, at least in the very short run.”

Because domestic consumption of pork may increase due to increased supplies of pork, the report said, domestic consumption of chicken and beef could drop and these products could be affected: “Clearly prices of these meats may be affected as a result of excess availability of total animal protein.”

Chinese tariffs on fruit and tree nuts would affect these exports more than tariffs on soybeans because those products are not very storable, the report stated. This would limit the ability of exporters to find alternative markets for these products.

In 2017, China accounted for 4 percent of U.S. exports in the fruit and tree nut category and 2 percent of U.S. exports in the vegetable sub-sector. Although these figures are not high, some specific items have a higher percentage going to China and they would likely experience the greatest market pressure in the event of Chinese tariffs.

5/16/2018