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While U.S.-China trade talks remain unresolved, data shows the U.S. has lost more soybean sales to the Asian country this year than last.
“Soybean exports to China are down significantly from last year and the volume of outstanding sales is relatively low, indicating that there doesn’t seem to be a large volume of sales waiting to be exported,” Veronica Nigh, economist at the American Farm Bureau Federation, said in an email.
Accumulated lost sales of U.S. soybeans to China in the marketing year ending Aug. 31 have grown so quickly that four weeks ago the level already surpassed that of the entire 2016-2017 marketing year, Nigh pointed out. Accumulated lost sales include cancellations, foreign purchases and destination changes.
Note: Green bars indicate Trump administration announcements on trade.
This past weekend, U.S. Commerce Secretary Wilbur Ross concluded negotiations with China on trade with no specific agreement. A White House statement said the two sides focused generally on supplying U.S. agriculture and energy products to China.
Beijing has threatened to retaliate on the Trump administration’s proposed tariffs with duties on U.S. goods such as soybeans. China is the second largest destination for U.S. agriculture exports, and about one in three rows of U.S. soybeans go to the Asian giant, according to industry reports.
“At the moment the market environment, the business environment, is one that has extreme uncertainty underpinning it,” Devry Boughner Vorwerk, corporate vice president, global corporate affairs at Cargill, told CNBC in a phone interview on Monday. “With all the uncertainty hanging over our head with potential tariffs going into place, the U.S. may lose its position with one of its biggest customers.”
Minnesota-based agriculture giant Cargill has been operating in China for more than 40 years and operates six oilseed crush plants in the country, according to a letter Vorwerk sent the Office of U.S. Trade Representative on May 11.
Note: Green bars indicate Trump administration announcements on trade.
China canceled 136,000 metric tons of U.S. soybean purchases in the week ended May 24, according to the latest data from the U.S. Department of Agriculture Foreign Agriculture Service. That brings accumulated exports of U.S. soybeans to China for the marketing year to 27 million metric tons, 20.5 percent less than this time last year.
Beijing said in a statement this weekend it is willing to increase imports from the U.S., but said any deal is off if the Trump administration goes through with tariffs, according to a report from state-backed newspaper Xinhua.
On those conditions, China also offered to purchase nearly $70 billion of U.S. farm and energy products, The Wall Street Journal reported Tuesday, citing sources.
That figure is a fraction of the $375.2 billion U.S. trade deficit with China that President Donald Trump would like to reduce. The trade dispute also involves protection of U.S. intellectual property and picked up in the last several months with the Trump administration’s tariffs on steel imports.
U.S. soybean futures are down 1.7 percent week-to-date to just above $10 a bushel. They dropped 1.9 percent last week, after rallying 4.3 percent the week prior in the wake of a pause in the trade dispute.
To be sure, overall U.S. soybean exports to China were expected to decline in the current marketing year due to a historical low in U.S. soybean protein content, Rich Nelson, director of research at market research and trading firm Allendale, told CNBC last month.
The cancellations and declines in Chinese purchases of U.S. soybeans in the last several weeks also come during a time when China tends to shift its buying to Brazil due to seasonal factors.
“We believe China would still like to commit to purchasing from the U.S. market,” Cargill’s Vorwerk said.
