“We will have to examine the contents of the new agreement between the United States and China very carefully. From the previews that have been spread, the agreement could alter the flows and dynamics of the market for commodities global agri-food industries". Thus Confagricoltura, with a position taken by its president, Massimiliano Giansanti, shines a light on the announcement by the White House of the imminent signing, on January 15, of the so-called "phase one" of the commercial peace between the United States and China.
In fact, what worries farmers is the commitment, agreed between the USA and China, of to raise at least up to 40 billion dollars in two years the imports of agri-food products from the USA. "In practice, China's imports should double in value compared to the levels existing until the start of the trade dispute", commented Giansanti. This very strong increase, according to Confagricoltura would be to the detriment of the other main suppliers of the Chinese market: the European Union, Australia, Argentina and New Zealand. "For our part - continues Giansanti - we invite the EU Commission to evaluate whether the new agreement between the United States and China fully complies with the rules of the World Trade Organization (WTO) on free competition".
The reconstruction of the last few months of trade, while the tough clash between the two Bigs raged, is useful for understanding what happened and what could happen now in international soybean trade.
Following the US-China trade war, exports from the US to the Chinese mainland collapsed and the United States became the first soybean supplier on the European market with an incidence of more than 70% of total imports. The percentage has more than doubled compared to the situation in mid-2018.
It is clear that now, with the new agreement signed between the two countries, everything is destined to change with the foreseeable recovery of US soybean exports to the Chinese market. It is worth remembering that until the start of the trade dispute, 60% of total US soybean exports were destined for China.
This is why, Gianzanti affirms and concludes, “we will have to carefully check the effects on prices of the rotation of trade flows, which seems to be close. Furthermore, at European level, an extraordinary plan must be launched to increase the production of cereals and vegetable proteins, in order to reduce the dependence on imports from third countries".
Chinese imports of US-produced soybeans are already recovering. Last November, according to data from the Beijing Ministry of Agriculture, purchases amounted to 2,6 million tons: the highest monthly quantity since the beginning of 2018.
