U.S.-China Tension has Chinese Soybean Buyers Looking at Plan-B
As trade tension between the U.S. and China intensifies, Chinese soybean buyers are reportedly creating contingency plans in order to ensure a reliable supply in the face of a possible trade war that could involve grain commodities.
Two Chinese traders have begun buying larger volumes of rapeseed meal as an alternative protein source to be used in livestock feed in the event that U.S. soybeans become unavailable. Sources have also revealed that their companies are buying higher volumes of domestic distillers’ dried grains (DDGs), are considering buying more soybeans from Brazilian sources, and are beginning to cover their interests by including exit clauses in their contracts with U.S. soybean sellers.
President Trump announced tariffs of up to $60 million on Chinese imports after accusations of China misusing U.S. intellectual property. In response, China announced additional tariffs of up to $3 billion on U.S. goods including fruit and wine. Now traders are concerned that soybeans could be a logical next target as trade relations between the two countries become increasingly tense.