US-EU soybean trade skyrockets but industry concerns over low prices and China trade conflict remain
21 Sep 2018 --- Earlier this year when the trade conflict between the US and China first began to bite, the US soybean industry was bracing itself for severe losses as China slapped tariffs on the legumes as part of a retaliation package. While the industry continues to advocate for an end to the tariff war and for long-term solutions to the loss of export markets, new figures reveal that the US has overtaken Brazil as the leading soybean supplier to the European Union with a 52 percent market share.
This represents a 25 percent jump on this time last year and comes just a couple of months after Presidents Jean-Claude Juncker and Donald Trump agreed on a deal to ramp up soybean trade between Europe and the US.
Although other products were included in the US-EU summer negotiations, the most notable commodity was soybeans as in April China had seriously upped the severity of its sanctions against the US by targeting soybeans for 25 percent retaliatory tariffs, after initially not including the commodity on its list of items impacted.
The current figures show that imports of US soybeans to the EU have been continuously increasing over the past weeks. Compared to the first 12 weeks of the 2017 marketing year (July to mid-September), EU imports of soy beans from the US are up by 133 percent at 1,473,749 tons.
At the time of the first reporting issued on August 1, 2018, and covering the first five weeks of the current marketing year, imports amounted to 360,000 tons, corresponding to a 280 percent year-on-year increase.
In terms of the EU's total imports of soybeans the US share is now at 52 percent, compared to 25 percent in 2017 which puts the US ahead of Brazil (40 percent), the EU's second main supplier, followed by Canada (2.3 percent), Paraguay (2.3 percent) and Uruguay (1.7 percent).
“I welcome the latest trade figures which show that we are delivering on the commitment made by Presidents Juncker and Trump to increase trade, particularly in relation to soybeans,” says Commissioner for Agriculture, Phil Hogan. “This reflects both our longstanding trade relationship and the potential to achieve so much more by working together to build on that relationship.”
The EU currently imports approximately 14 million tons of soybeans per year as a source of protein for animal feed as well as for milk production. US soybeans are a very attractive feed option for European importers and users thanks to their competitive prices.
However, it is those prices that are a concern for the US soybean industry which has witnessed a 20 percent decline fall in price since June.
“The American Soybean Association is highly concerned about the ongoing, escalating feud, as it will continue to exacerbate damages both short term and long term to our China market,” says an ASA statement.
“Since June, the price of US soybeans at export position in New Orleans has dropped 20 percent, from US$10.89 to US$8.68 per bushel. Farm prices have fallen even further. During the same three-month period, the premium being paid for Brazilian soybeans has increased from virtually zero to US$2.18 per bushel, or US$80 per metric ton (MT).”
“ASA continues to advocate for ending the tariff war and for long-term solutions to the loss of export markets, including the conclusion of the North American Free Trade Agreement (NAFTA) and negotiation of bilateral trade agreements that expand and diversify US markets for soybean and livestock products.”
The latest soybean data from the EU comes from the Crops Market Observatory which the European Commission launched last July to share market data and short-term analysis to ensure more transparency.
By Gaynor Selby
