NASHVILLE, TENN. (RFD-TV) — China is expected to buy more than 75 million metric tons of soybeans over the next several years, but that could all be in jeopardy, as supplies there are already running heavy.
A new Reuters report shows that China now has a soybean “glut.” They found stockpiles at Chinese ports are at record levels right now, and crushers there are holding the most supplies since 2017.
Reports show that state inventories in China currently have enough soybean supplies to meet demand for about five months.
According to White House trade officials, China pledged to buy 12 million metric tons of U.S. soybeans before the year is up, but no concrete plans have been announced.
While that soybean trade framework is in place, Ohio farmer Chris Gibbs tells us he will believe it when he sees it. Gibbs’ farm was one of the stops along the “Motorcade for Trade,” the coast-to-coast event hosted by the group Farmers for Free Trade.
“I don’t think I want to elevate it to deal right at the moment,” Gibbs said. “What we’ve got here are agreements to talk about a framework that were maybe sealed with a handshake. If we had had a trade deal, the President would have opened up one of those black binders, and his signature would have been on it. And so, I haven’t seen any ink yet. So, until I see ink — particularly out of China — I’m dubious about calling it a trade deal.”
Among the many problems facing farmers today, Gibbs said, trade has been his top issue since tensions with China began in 2018.
Ahead of the Trump-Xi meeting last month, China did buy some U.S. soybeans — about three cargo loads worth — and has since resumed purchases of some U.S. grains, including sorghum and wheat. However, in recent years, Brazil (and more recently, Argentina) has become its primary soybean supplier.
This week, both the U.S. and China dropped retaliatory port fees and reduced tariffs on many U.S. agricultural goods by 10 percent. Still, with a 13 percent tariff on U.S. soybeans to China (down from 23%), Brazil offers a better bargain in the international market.
“It still does leave Brazil as the dominant exporter on the grain side, certainly for China,” said Rich Nelson, a commodity broker at Allendale Inc., “Keep in mind, as far as pricing, if we are kind of including this 23% tariff, which still applies to U.S. products, Brazil is still a cheaper supplier right now. So, China will still buy a little bit from the U.S., but they’ll still lean on Brazil as the dominant supplier in these next few years ahead.”
According to Nelson, previously, traders believed that China faced a soybean shortfall between December and February and would rebuild government stocks. If the recent Reuters report holds, that might not be the case.
