For soy, the effects reach Argentina

The price of oilseeds has fallen by almost 20% since the beginning of the trade dispute

The 25% tariff imposed by China on the import of American soybeans, in retaliation for the measures ordered by Trump , has effects on the major food producing countries, including Argentina

The confrontation concerns the world's largest importer of soybean, China, with nearly 100 million tons per year, and the United States , world's largest producer and second largest exporter. l & # 39; oilseeds. In 2017, US soybean sales to China reached $ 17,000 million for 35 million tonnes. Argentina, the world's third largest producer and leading seller of processed soy products, such as protein meal and oils, is no stranger to this scenario.

The first consequence of the tariff war was the collapse of the international soybean price. Since the end of May, when grain market operators took seriously the threats of the authorities of these two countries, until the day before, the price in Chicago dropped by 19.7% and reached 306 dollars the ton, the lowest price in ten years. The fall stopped yesterday when it rose by $ 14 a ton (see page 26).

The confrontation between the two giants took Argentina at a bad time. In the wake of the drought, the soybean crop in Argentina dropped 37.4% from last season, with a drop of just over 18 million tonnes from what was expected if the weather had not played a trick. Brazil, the world's largest exporter of beans and the world's second-largest producer, has benefited from Chinese demand for other markets.

However, "with this new scenario, all countries lose," said Juan Manuel Garzón, economist. of the Ieral-Mediterranean Foundation. "It will depend a lot on what happens with the Chinese soybean demand, if soybean demand drops in China, because of the uncertainty or the brake on investment, which is bad for all exporting countries of soya. "

The question of triangulation is crucial for the specialist. "The United States, with less incentive to sell soybeans to China, will be looking for new markets," he said. This would result in lower prices in these places. "That's why there will be a rearrangement of bids and the Argentine soybean that went to these markets, will go to China, if this rearrangement of price flows occurs quickly, the price gap will not be so important, "he explained. According to Garzón, "there may be an opportunity to place soybeans at a price higher than that of the United States, but there is a significant risk that this uncertainty will only reduce prices without distinguishing the origin of the goods. ". in this note

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