US soy prices to fall 4% if China taxes US beans: Rabobank

28 Mar 2018 | Rei Geyssens

US farm prices of soybeans would fall 4-5% in the short term if China introduced tariffs on the oilseed as a result of its trade spat with the US, Dutch bank Rabobank said in a report Wednesday.

The sensitivity analysis was based on a scenario of an annual 100,000 mt cut in Chinese imports of US soybeans.

The bank anticipates that in the longer run, US soybeans will remain competitive globally and will find other homes, such as Mexico, but the oilseed would lose ground against corn on US plantings.

Under this scenario, US corn prices will remain “relatively well supported” and would fall  2-2.5%.

However, the Dutch bank said it was unlikely China would tax soybeans as supply from other major exporters “would not be able to compensate for an unexpected disruption of US soybean flows to China."

It added that Brazil already exports more than 74% of its soybeans to China and won’t have capacity in the short term to meet new needs.

“We believe China’s current dependency, short-term global constraints, and the complexity required to fully source its feed demand chain may limit China’s ability to set any tariffs on US soybeans”.

China imported 93.5 million mt of soybeans during the 2016/17 campaign, of which over a third were sourced from the US, for a total value of about $14 billion.

If China were to implement tariffs on US pork, which it proposed as a countermeasure to Trump’s steal and aluminium tariffs, US corn acreage would fall by 100,000-200,000 acres by 2019/20.