Tom Polansek
4 min read
By Tom Polansek
CHICAGO (Reuters) - A surprising tariff pause between Beijing and Washington will not help U.S. farmers revive soy sales in China without additional concessions, producers said, because top-supplier Brazil still has a competitive price advantage.
Under the truce announced on Monday, the United States will cut extra tariffs it imposed on Chinese imports to 30% from 145% for the next three months, while Chinese duties on U.S. imports will fall to 10% from 125%.
Soybean export premiums fell in Brazil while U.S. futures prices hit a three-month high on the de-escalation, reflecting expectations that China could buy more from the U.S.
But American farmers said the tariff pause isn't enough. Brazil, the biggest soy supplier to China, has ample supplies from a record harvest, lower prices, and its farmers do not face the Chinese tariff that U.S. competitors do. China, the world's largest crop importer, already sources roughly 70% of its soybean imports from Brazil.
"The tariff that remains in place for U.S. soy is far from inconsequential," said Caleb Ragland, a farmer in Magnolia, Kentucky, and president of the American Soybean Association.
"Products purchased from our competitors in Brazil and Argentina are not burdened with this extra cost."
While the United States in 2022/23 accounted for about 28% of China's soybean imports, it has been a critical market for U.S. farmers, representing more than half of U.S. soybean exports in the most recent marketing year.
President Donald Trump's trade war has hurt sales of American soybeans, sorghum and pork products to China and created a new opportunity for Brazil.
Brazil aims to export even more agricultural goods to China, including sorghum, pork and chicken, and seize market share, said Luis Rua, who oversees foreign trade for Brazil's Ministry of Agriculture.
"What they (China) will buy is what they barely need to get by," Dan Henebry, a corn and soy grower in Buffalo, Illinois, said. "If South America is short... they'll buy from us."
Chinese buyers have also avoided U.S. wheat and bought 400,000 to 500,000 metric tons from Australia and Canada in recent weeks, traders said.
U.S. farmers hope China may buy American farm goods as part of trade negotiations. However, Chinese importers will be reluctant to book large purchases because of remaining trade barriers and uncertainty over what will happen when the pause expires, said Even Rogers Pay, agriculture analyst at Trivium China.
"There are a few things stacked up against this trade war ceasefire being a boon for farmers," Pay said.
