U.S. Soy May Lose China Market Share for Good in Lengthy Trade War -Executive

May 20th, 2019


Category: Grains, Trade

(Today Online) – The United States is likely to permanently lose soybean export market share in China the longer U.S.-China trade talks drag on, a top executive at the U.S. Soybean Export Council (USSEC) industry group said on Friday.

China is also unlikely to ever return to importing record volumes of U.S. soybeans, as the world’s top soy consumer did as recently as 2016, even if trade talks between the two countries wrap up promptly, said Paul Burke, USSEC’s senior director of U.S. soy marketing, on a conference call with the media.

U.S. soybean exports to China, the world’s top market, plunged 74% last year after Beijing slapped steep tariffs on American soy in July in retaliation for U.S. duties on Chinese goods.

The tit-for-tat tariffs stoked the bruising U.S.-China trade war that has dragged soybean prices to decade lows, eroded U.S. farm income and sent the industry scrambling for alternative export markets.

Trade tensions escalated last week when U.S. President Donald Trump raised tariffs on $200 billion worth of Chinese goods, prompting China to increase duties on $60 billion of U.S. imports.

“The longer we are out of the China market, the likelihood (increases) that we would not regain all of the share or all of the volume that we’ve had in the past,” Burke said.

“If the resolution were to come in a shorter amount of time … China would still remain our largest export market, but I don’t think that we would see the record export levels that we had in recent years,” he said.

China, which imports about 60% of all soybeans traded globally, has bought more South American soybeans to replace U.S. beans. Beijing will increasingly look to develop new suppliers, Burke said.

USSEC has been working to develop new markets for U.S. soy and bolster demand from existing customers. And although no single market is large enough to replace lost Chinese demand, a combination of smaller markets may, over the long term, shore up that lost demand, he said.

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