As Brazilian and Argentine soybeans offer more competitive prices, U.S. share in China’s soybean imports has dropped significantly, falling to under a quarter last year compared to 51% in 2009. Traders point out that rising Chinese demand is increasingly being met by South American countries. One Singapore-based trader noted, “This year we have large soybean supply coming from Argentina which is going to heat up competition. U.S. share is already shrinking. They are going to lose more to Argentina this year.”

Political uncertainties in the U.S., particularly the upcoming presidential election, also contribute to the shift in Chinese buying patterns. Chinese traders are diversifying their sources to lower risks of supply disruptions that could result from political changes. A Shanghai-based trader remarked, “U.S. market share will continue to decline because you have the political backdrop of elections.”

To counter these challenges, U.S. growers are exploring newer markets like Southeast Asia and focusing on increased domestic demand for renewable fuels. However, Jeff O’Connor, a soybean farmer from Illinois, the top-producing state, acknowledges the difficulty in offsetting the loss of the Chinese market: “What we are losing internationally to China we cannot make up for domestically in one year’s time. We cannot replace that overnight.”

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“Brazil and Argentina have been presiding over a massive devaluation of their currencies, which is not good for our farmers. Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries,” Trump wrote.

Brazil’s President Jair Bolsonaro, an avowed Trump fan who has sought closer U.S. ties, said in a local radio interview that he would call his U.S. counterpart, who he was confident would listen to Brazil’s concerns.

“Their economy is not comparable with ours. It’s many times bigger. I don’t see this as retaliation,” Bolsonaro said to Radio Itatiaia.

“I’m going to call him so that he doesn’t penalize us … Our economy basically comes from commodities, it’s what we’ve got. I hope that he understands …and I’m almost certain he’ll listen to us,” he said.

Dante Sica, who is Argentina’s production minister, said Trump’s announcement was “unexpected” and he was seeking talks with U.S. officials. Additionally, Argentina’s Foreign Ministry said it will begin negotiations with the U.S. State Department.

Trump’s tweet also urged the Federal Reserve to lower interest rates so countries “no longer take advantage of our strong dollar.

Source: Reuters