A report from Rabobank released this month summarizes the outlook for U.S. soybean exports, which it believes will continue to decline to China if tariffs take effect and remain in place. But the firm found U.S. soybean exports could increase to the European Union (EU).
President Donald Trump announced in June his intent to impose tariffs on $50 billion worth of goods from China and threatened to impose tariffs on $400 billion more. Meanwhile, China is promising to retaliate with its own tariffs, including an additional 25 percent tax on U.S. soybean imports.
“Given the risk of an additional 25 percent duty on U.S. soybeans into China, Chinese buyers have paid higher prices for non-U.S. origin soybeans,” according to a June Rabobank report. “If trade negotiations continue to distort Chinese imports of U.S. soybeans, other countries will benefit from lower U.S. soybean prices, which will be offset by higher South American soybean meal prices. China will also have to pay continued premiums for South American soybeans, pushing other destination markets to an extended U.S. export window, maybe closer to year-round.”
Meanwhile, a Bloomberg report cited more information from Rabobank International, which says the United States is likely to overtake Brazil as the biggest soybean seller to the European Union.
“It’s already happening,” said Pedro Dejneka, partner at Chicago-based MD Commodities, quoted in the article. “While China concentrates its purchases on Brazil, the rest of the world turns to the U.S.”
China is the world’s largest importer of soybeans, and the prospect of fewer shipments from the United States has boosted premiums for the commodity in the Brazilian market, the report explained. China could replace around 4 million metric tons of U.S. soybeans with Brazilian supplies in the fourth quarter if tariffs are implemented, according to Rabobank.