Soy Shrugs Off China’s Tariff Cut as Traders Want to See Sales
Soybean futures traded with little enthusiasm in a lackluster response to China’s decision to cut retaliatory tariffs on American imports. Hogs, though, jumped with traders more optimistic for U.S. pork sales as the Asian nation suffers from an epidemic of African swine fever.
“It’s something, but it’s not a game-changer,” Don Roose, president of U.S. Commodities in Iowa, said of the tariff cut. “And they continue to buy cheaper beans from South America.”
Soybeans for March delivery finished 0.1% higher at $8.81 a bushel after earlier sliding as much as 0.4%.
Beijing announced Thursday that it will halve additional tariffs on some $75 billion of imports later this month. With the earlier retaliatory duty remaining in place, it still means U.S. soybeans will be subject to a 27.5% tariff, down from 30% previously. Punitive tariffs on American pork, chicken and beef imports were reduced to 30% from 35%.
Brazil is harvesting a massive soy crop, which has helped it to steal market share from the U.S. after the county signed a partial trade deal with China on Jan. 15. While China pledged to buy billions of dollars worth of American farm goods, it also said purchases have to make economic sense.
China’s tariff reduction, effective Feb. 14, will coincide with a cut by Washington to duties on some Chinese products. Both nations have said they will scale back levies on each other’s goods as part of the phase-one deal.
Still, China continues to turn to Brazilian shipments, with buyers picking up supplies from South America this week.
And the Asian country, the top world soy importer, accounted for only 31,500 metric tons of U.S. sales that totaled 707,800 tons last week, U.S. Department of Agriculture data showed Thursday.
Meanwhile, April hog futures surged by the 3-cent per pound daily price limit in Chicago, settling at 64.875 cents, the highest this week. The African swine fever outbreak has killed tens of millions of pigs in China, the world’s top pork consumer.
Pork is “the one product we think the Chinese really need,” Roose said.
©2020 Bloomberg L.P.