Archer-Daniels-Midland sees tariff war changing the structure of the soybean trade for good

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President Donald Trump’s trade war will forever change the way China’s top importer buys soybeans.

That’s according to Archer-Daniels-Midland, one of the world’s largest agricultural commodity traders.

The tariff spat, which has already reduced US bean purchases, will likely mean that China will attempt to reduce its dependence on the United States by buying elsewhere and improving the yields of its own production, said Ray Young, chief financial officer of ADM. noted.

“We shouldn’t be naive in assuming that in the longer term, China won’t want to become more self-reliant on its own supply of agricultural products,” he told the Kansas Fed Ag Symposium on Tuesday.

“I think this has been a wake-up call for China in terms of understanding the relationship between the United States and China and how they will view food security in the future.”

China imposed retaliatory tariffs of 25% on U.S. soybeans more than a year ago, halting shipments ahead of some goodwill purchases in December and early this year. Since then, the nation has turned to South American purchases.

At the same time, the spread of a deadly swine disease has reduced China’s soybean requirement.

Chinese oilseed imports are likely to reach 80 to 85 million metric tonnes as African swine fever, also known as ASF, reduces demand for pig feed, Young said.

Before the trade war, ASF and China’s economic downturn, expectations were purchases of 100 to 105 million tonnes, he said.

“Going into the trade war, the thought process was that China couldn’t survive without buying American soybeans,” he said. ‘It turned out to be wrong. China can survive without buying US soybeans, in part because of the ASF problem that has emerged. “

ADM, which has facilities at Cedar Rapids, remains confident that the feud will be resolved at some point, leading to more purchases of American farm products, including soybeans and ethanol.

But in the long term, the United States must wean itself off from China and find other uses for soybeans and corn, according to the firm.

Chinese soybean yields are just over half that of the United States, and the country will look to improve on that, Young said. China is also carrying out land reform, which will consolidate farms into larger structures and allow more agronomic improvements.

In an effort to become less dependent on ADM and Cargill – which also operate facilities at Cedar Rapids – China created Cofco International, a company resulting from the acquisition of Dutch grain trader Nidera and the agricultural arm of Noble Group. Young said. .

Bloomberg “We shouldn’t be naive in assuming that in the longer term, China won’t want to become more self-reliant on its own supply of agricultural products,” said ADM chief financial officer Ray Young. Above, an Archer-Daniels-Midland grain elevator in St. Louis.


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