Russian Soybeans in China

The 25% tariff on US wheat and soybeans that China slapped on US imports as part of the ongoing trade war between China and the US has proven to be a good thing for Russia.

https://www.reuters.com/article/us-usa-trade-china-agriculture/china-approves-wheat-soy-imports-from-russia-idUSKCN1UL275

As far as wheat goes, Russia is currently the worlds largest exporter of wheat. As such they may be able to satisfy China’s import needs for wheat. But what about soy?

Well, China consumes more soy every year than the entire United States can produce. Both the United States and Brazil produce more than 50 million metric tonnes of soy every year.  Russia, for 2019 is predicted to top out total soybean production at 4 million metric tonnes. Russia would have to increase soy production more than ten fold to make a truly meaningful contribution to Chinese soy importation.

The trade war with the US caused an increase in the price of Brazilian soy, although not to seriously high levels. A round of swine flu in China is decreasing the demand for livestock feed and helping keep the international commodity price for soy down.

So what does this really mean? US exports of soy are probably not going to suffer from the trade war, and Chinese importers are probably not going to suffer from the trade war. The Chinese will focus on purchasing Brazilian soy when they need it, and the US will get contracts to countries other than China as it can be slightly cheaper than Brazil for many of those other countries. World soy prices are commodity prices first and foremost, so it is unlikely that the US or China will face any serious repercussions from the trade war.

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