China not expecting any soybean supply problems in short term, agriculture ministry says
Bulk of China’s imports in first half of year will come from South America, but situation will be continuously monitored
China’s agriculture ministry said on Tuesday it expects soybean supplies to be “basically normal” in the short-term after Beijing proposed a 25 per cent tariff on US imports, but will monitor the impact for the rest of the year.
In its first official comment on the issue, the Ministry of Agriculture and Rural Affairs said in its monthly crop report that South America is the main supplier to China during the first part of the year.
However, “further developments and the impact on supply and demand for the whole year must continue to be monitored”, it said, in an acknowledgement of the planned 25 per cent tariff on soybeans from the United States, China’s second-largest supplier.
The proposed tariffs are in retaliation for recent aggressive US trade actions amid an escalating trade dispute between the world’s top two economies.
China imports about US$40 billion worth of soybeans a year, which are crushed to make meal for use in animal food and oil for cooking. About a third of its imports come from the US.
China’s soymeal futures jumped nearly 6 per cent to record highs on Monday following news of Beijing’s planned tariffs, with other key proteins also soaring on the news.
But without a time frame for the tariffs, and proposed talks between Washington and Beijing now on the table, there is still a great deal of uncertainty in the market, analysts said.
The ministry did not change its forecast for soybean imports in the 2017-18 crop year, and has not yet issued an outlook for the following year.
It said also that state corn sales to begin this week will curb rising prices of the grain in the near-term but the impact will be limited, with demand from processors expected to be healthy.
The report also lowered the forecast for sugar output in 2017-18 by 50,000 tonnes to 10.25 million tonnes, largely due to a decline in yields in major growing region Guangxi.