For the first time since the start of the trade war between China and the U.S., China imported zero soybeans from the U.S. in one month.
China’s imports of U.S. soybeans were zero in November; however, the two countries agreed to a truce on December 1, and China has purchased U.S. soybeans this month.
To fill the gap in soy supplies, China has turned to Brazil, from which it bought 5.07 million tons of soybeans in November, an increase of 80 percent from the previous year.
As a result of shifting demand, Brazil reportedly is planting more acres with soybeans and fewer acres with sugar cane. One report said Brazil’s soybean acreage has increased by 2 million hectares in two years. China paid $20.3 billion last year for 53.8 million tons of Brazil’s soybeans, up from 22.8 tons in 2012.
In November of last year, before the trade war began, China imported 4.7 million tons of U.S. soybeans. In October 2018, its U.S. imports were only 67,000 tons. China typically gets most of its soybean imports from the U.S. in the last quarter as the harvest comes to market and while South American soybeans are in the middle of the growing season.
In 2017, the United States produced 119.5 million metric tons (mmt) of soybeans, the most on record, according to SoyStats. It exported 56.2 mmt, with China buying 37.5 mmt – nearly $12.4 million in whole soybeans and $24 million in soybean oil.
China removes tariffs on alternative meals
Meanwhile, China’s Finance Ministry has announced that it will remove import and export tariffs on a variety of goods, including alternative meals used in animal feed, in 2019.
According to a statement, import tariffs on alternative meals including rapeseed meal, cotton meal, sunflower meal and palm meal will be removed beginning January 1, 2019.
“This is basically getting ready for a rainy day, as commercial purchases of U.S. soybeans haven’t kicked off and so far it’s been just the state-owned firms that have done the buying,” said Monica Tu, analyst with Shanghai JC Intelligence Co. Ltd., in a Reuters report. “Though the volume of alternative meal imports is not that huge, they can substitute soy. [The tax removal] is basically offering end users more options.”