US grain groups worry over steel tariff retaliation
Houston, 6 March (Argus) — US agricultural groups have expressed concern about retaliation from China in response to President Donald Trump's proposed tariffs on imported steel and aluminum.
Trump has singled out China for trade imbalances, prompting China to respond that it will take "necessary measures to safeguard" its interests if tariffs are put in place.
China has already showed willingness to take action against US grains in response to Trump trade policies. China threatened anti-dumping measures over US sorghum in February in an apparent retaliation for tariffs on other goods. Sorghum is a minor US row crop at 5mn acres in 2017, but China was the leading buyer at 4.6mn t.
The American Soybean Association (ASA) warned that China could now take aim at US soybeans by reducing imports and purchasing more from Brazil and Argentina. China accounted for 57pc of US soybean exports at 32mn t in 2017, according to the US Department of Agriculture (USDA).
Brazil was the top supplier of soybeans to China at 50.9mn t in 2017, according to China customs data. Argentina supplied 6.6mn t of soybeans to China in 2017.
"Our competitors in Brazil and Argentina are all too happy to pick up supplying the Chinese market," the ASA said on 1 March. "Retaliation from China would add significant further injury to an already-hobbled farm economy."
Any significant shift in China's soybean buying patterns could result in higher US inventories and ultimately pressure soybean prices, further crunching farmer profits.
Farmer incomes are projected to decline again in 2018, extending a slide that began in 2014 because of global oversupply, according to the USDA.
US farmers are still forecast to plant 90mn acres of soybeans and 90mn acres corn in 2018, which would keep fertilizer demand in line with the previous season. But planting decisions, which hinge on crop prices, could change if China reduces demand for US grains.
"In this policy environment, Newton's third law applies: for every action there is an opposite and equal reaction," US Grains Council chief executive Tom Sleight said. "We know [agriculture] will be at the front of the line and we have experienced that in the past with the crops we promote."