CHINA - New tariffs on US soybeans unlikely to impact aquatic feed
According to Steve Hart, vice president of the Global Aquaculture Alliance, China’s 25% tariff on US soybeans won’t have much impact on prices of Chinese aquatic feed and, subsequently, Chinese aquaculture margins. “Overall, global supply is pretty strong now, so feed prices shouldn\'t be too impacted. Prices are significantly below the last peak in 2012.\"
That is at least in the short-run; but China\'s increased dependence on South American soybeans will leave it vulnerable to weather events which could impact the crop, and subsequently prices, Hart said.
After announcing it would impose 25% additional tariffs on imports of US soybeans in retaliation for US tariffs on Chinese industrial goods imposed on July 6, US soybean prices have been in freefall, while prices in Argentina and Brazil have risen sharply. According to Bloomberg, US soybean prices have fallen 21% in three months to $8.32 per bushel, as Chinese buyers cancelled orders.
But Hart, who previously also worked at the Indiana Soybean Alliance, said soybean prices in Argentina and Brazil still remain low compared with recent peaks. \"It could be worse,\" he said.
“Overall, global supply is pretty strong now, so feed prices shouldn\'t be too impacted. Prices are significantly below the last peak in 2012,” he said, when prices hit $18 per bushel.
Hart said China’s dependence on South American soybeans will leave it more vulnerable in future should there be a poor harvest, however. In this scenario, China would have to turn to the US, and pay the extra tariff.
“If there’s a dry spell and we have reduction in those [Argentinian and Brazilian] crops, feed mills will be forced to buy US soybean at 25% tariffs, and you could see some price inflation; feed prices could go up an additional 3-5% in that scenario,\" he said, adding that there has been \"more and more extreme weather in the past 10-15 years, and we’ve seen a lot of volatility in crop prices\".
But Hart also reckons more acres of soybean will likely be planted in Argentina and Brazil for next year, as a result of the tariffs. \"They\'re in a strong position,\" he said.
Source: Undercurrent News // Original Article