(Yicai Global) April 10 -- Latin American countries, in particular Brazil, are hoping to capitalize on a shift in soybean trade flows after China threatened to slap an additional 25 percent tariff on soybean imports from the United States amid heightened trade tensions between the world’s two largest economies.
The threat caused US exporters to send shipments off to Europe to avoid the extra costs of delivering to the world’s largest soybean importer, the Communist Party’s official newspaper the People’s Daily reported, citing Brazilian media. However, Latin American exporters have hiked prices to a record high as Chinese demand soars.
US soybeans are not irreplaceable, the Brazilian reports added, saying Latin American nations are very competitive in the sector. China imported more than 95.5 million tons of soybeans last year, with Brazil, the US and Argentina as its largest suppliers. Brazil made up more than half of the total figure and the States chipped in just over a third.
Brazil is the world’s second largest soybean producer and biggest exporter, and has been closing the production gap with the leading producer, the US, in recent years. The South American country will harvest 113 million tons this year, slightly more than China’s import demand of 100 million tons, Roberto Dumas Damas, a Brazilian economist, told People’s Daily. He projects Brazil’s soybean exports to China will continue to grow.
The US sold 458,000 tons of soybeans to undisclosed locations on April 6, Reuters reported, citing data from the US Department of Agriculture. The report suggested the commodities may have headed to the Netherlands, Germany and other European soybean processing nations.
“If the entire volume is confirmed to be going to the EU, it would be the largest one-off sale to the bloc in more than 15 years,” the report added, citing data from the USDA.
Should China officially impose the additional tariff on US soybeans, it may be tough for the world’s largest economy to increase exports to the EU. The States exported almost 33 million tons of soybeans to China last year, 62 percent of its total exports, but the EU imported only 14 million tons between July 2016 and June 2017.