The US Department of Agriculture (USDA) said Friday [February 22], that China committed to purchase an additional 10m metric tons of soybeans.
Soybean producers applauded news of the impending expansion of soybean sales to China, said the American Soybean Association (ASA) following the announced increase in purchasing. The agreement brings purchase commitments to about 16.5m metric tons.
However, the sales do not cover the value of having those tariffs end, the association said.
Following the announcement of increased sales, on Sunday, President Donald Trump said that he would delay an intended March 1 tariff deadline as trade talks with China continue. Initially, the timeline called for tariffs on multiple goods imported from China to increase from 10% to 25% on March 2.
“We are glad that talks between these two countries will continue without the tariff hike previously expected at the 90-day deadline later this week, but we need resolution and are discouraged that it’s still hard to see a tangible end in sight,” Davie Stephens, a soybean grower from Clinton, Kentucky, and American Soybean Association (ASA) president, told us.
The ASA is asking the Trump administration to continue trade discussions. The association is seeking an end to the tariffs as part of the negotiated outcomes from those talks.
The value of US soybean exports to China has expanded from about $414m in 1996 to about $14bn in 2017, said the ASA. In 2017, China’s imports accounted for about 31% of the US soybean crop or about 60% of the exports for the feed ingredient.
The additional sale commitments could be part of a solution, said Stephens. But, the industry is looking for “structural reform” to prompt China to end its tariffs on US soybeans and allow the market to reopen.
The USDA’s Foreign Agricultural Service reports that since the start of the soybean marketing year in September there have been about 586,000 metric tons in exports sales to China with the majority to be delivered during the 2018/19 marketing year. There also have been about 182,000 metric tons sold for exports to unknown destinations for the 2018/19 market year.
However, the USDA’s export forecast released at the end of last year for this fiscal year also anticipated about a $3bn drop in exports partially based on the fall in soybean exports to China.
In the next ten years, China’s soybean demand is anticipated to support most of the expansion in global soybean trade, the ASA said. It will be a prime market of interest for countries growing the feed crop.
Ongoing tariff considerations
In July, as part of a back-and-forth exchange of tariffs, China announced a tariff on US soybeans in response to the administration’s decision to put 25% tariffs on $34bn in goods from China.
The amount of the tariffs imposed on about $200bn in products from China was set to increase starting Saturday, March 2.
That deadline has been extended based on the amount of progress made in trade talks, according to information from the administration.
However, producers of the feed ingredient are asking the administration to rescind the tariffs and include soybeans in the effort to cut the trade deficit with China, said the ASA.