from AgroPages
In April 2018, the US government released a list of Chinese goods that may be subjected to new tariffs, and the Chinese government quickly counterattacked and decided to impose tariffs on the US-origin soybeans, automobiles, chemicals and other goods, which initiated the US-China trade war. Soybeans, as a very important bulk agricultural product in the US-China trade, unfortunately become the "sacrifice" of the political battle between the two superpowers.
 

China is the world's largest importer of soybeans, while the US is the world's largest soybean producer. China is traditionally the number one export market for the US, importing US soybeans worth US$13.9 billions in 2017, which is 60% of the total US exports and nearly one out of every three rows of annual US soy production. Therefore, the trade war will certainly have a huge and far-reaching impact on China, the US, and even the global soybean market.
 

Recently, a seemingly inspiring event occurred with respect to the US-China trade war – on December 1, 2018, the leaders of China and the US reached a 90-day truce at the G20 Summit held in Buenos Aires, the capital of Argentina. According to the agreement, both sides will not increase tariffs for 90 days, and both sides should take this time to resolve trade disputes between the two countries. Before this article was completed, i.e. January 10, 2019, China re-launched two rounds of US soybeans purchases. However, industry insiders are still not optimistic about the trend of the US-China trade war after 90 days and the resulting impact on the soybean industry.
 

As a very important bulk agricultural product in the world, soybeans involved in the US-China trade war will have a considerable impact on many countries and industries. Countries, such as China, the US, Brazil, Argentina and Russia, and related industries, such as soybean planting, exports, agricultural inputs and the futures market, will undoubtedly be influenced. It is impossible to cover all aspects of the US-China soybean trade war in a small article. To have a relatively more comprehensive understanding of the impact of this white war on the global soybean industry from the perspective of the subjects involved, AgroPagesinvited experts from the American Soybean Association, the Brazilian Soybean Producers Association (Aprosoja Brasil) and the Argentine Soybean Chain Association, independent consultant from the Chilean agriculture industry, experts from the famous American financial services firm INTL FCStone and Dorsey & Whitney LLP, to sit together to discuss the topic. Unfortunately, we tried and failed to get the views from relevant organizations of China, one of the absolute important subjects in this trade war. 
 

Soybean exports: Who is cheery and who is morose?
 

US soybeans: a sharp drop in exports to China and record high inventory
 

The impact on the soybean industry is significant. According to data compiled by the US Department of Agriculture, the effect of China’s reduction in soybean purchases is expected to be a reduction of 16 million tons on an annualized basis. That would equal about US$5.2 billion in export earnings based on current prices for US exported soybeans. Dorsey & Whitney attorney Dave Townsend, who is in the firm's Corporate Group and its Technology Commerce and National Security Law Practice Groups, revealed that the US Congress and the Trump administration are providing $3.6 billion in payments to US soybean farmers to partially offset the lost export opportunities.
 

“US soybean exports have been slow because China was the largest buyer”, said Brett Cooper, head of Asia Pacific Commodity Division of INTL FCStone, a leading US financial services firm. Cooper also provided us with some more detailed data: At the start of December, the US exported 13.3 million metric tons (for the marketing year from September 2018 to August 2019). At the same time last year, it was 23.0 million metric tons (MMT). So far this year, the US has shipped 0.38 MMT to China, while at this time last year it was 16.2 MMT.
 

For the 18/19 marketing year, which ends in August 2019, the US Department of Agriculture expects the US to have stocks of 25.99 MMT, which is the highest on record. In the previous 10 years, the average amount of soybean stocks was only 5.5 MMT. “The US farmers are in a difficult position because they just harvested their biggest soybean crop ever (125 MMT) and their biggest export customer isn’t buying their soybeans,” said Cooper.
 

Davie Stephens, president of American Soybean Association, expressed great concerns about the long-term cooperation between China and the US. “There has been a drop of approximately 20% in soybean prices since talk of the tariffs first started. We have worked on our relationship with China for many years, and China has made decisions to subsidize the domestic production of soybeans and other protein crops, and to maximize soybean imports from other exporting countries, particularly Brazil. We welcome an end to this trade war before those decisions become long-term policies for China.”
 

Brazilian soybean exports hit a record due to US-China stalemate

 

In dramatic contrast to the US soybeans that have suffered heavy losses in exports, Brazil's exports have hit a record. From September 2017-August 2018, Brazil shipped 76.19 MMT, compared to 63.14 in the previous year, which is an increase of 20.1%. Brazil's shipments to China during that time were 61.12 MMT compared with 49.25 MMT the previous year. During the 2013/2014 marketing year, 71.8% of Brazil’s soybean exports were to China. In 2017/18, that number was 80.2%, which is a record.
 

Bartolomeu Braz Pereira, president of Aprosoja Brasil, stated that in this last harvest, a drop in the base price of a bushel, as quoted in the CBOT, was something around 10 points, compared to the average prices quoted in the last three years. “Our exports to China in recent years have grown a lot. In the last year, the growth was 11 points, compared to the immediate past year, representing an increase of seven million tons in grain exports. This growth in our exports reflects the impasse between China and the US, which resulted in an increase in the prices charged at Brazilian ports, despite the drop in the figures at the CBOT. This was due to the appreciation of the premium* charged at Brazilian ports, reaching an increase of 190%. The price was US 55 cents per bushel and reached US160 cents per bushel (price paid at the Port of Paranaguá, in the state of Paraná). This scenario contributed to the increase in soybean prices paid to the producer.”