[Source/Observer Network, Zhang Jingjuan] Despite the ceasefire in US-China trade, American farmers are still not feeling relieved.

According to a report by Reuters on the 13th, American soybean growers said that the tariff deferral agreement reached between China and the United States is not enough to help American farmers restore soybean sales to China. Unless the US makes further concessions, Brazil, the main supplier, still has a price advantage.

According to the Joint Statement of the Sino-US Economic and Trade Talks in Geneva announced this Monday, the US will reduce the tariff on Chinese goods from 145% to 30%, and China will reduce the tariff on US goods from 125% to 10%, with both sides reducing by the same percentage. The initial validity period of the tax adjustment is 90 days, and related negotiations will continue.

After the easing of trade tensions, the export premium for Brazilian soybeans has fallen, and the Chicago Board of Trade (CBOT) soybean futures price hit a three-month high, reflecting market expectations that China may increase its purchases of US soybeans.

However, American farmers believe that merely suspending tariffs is insufficient.

In recent years, China has been continuously promoting diversification in agricultural product imports. Brazil has replaced the US as China's largest soybean supplier due to advantages such as record-breaking harvests and lower prices. As the world's largest importer of agricultural products, about 70% of China's soybean imports come from Brazil.

Caleb Ragland, chairman of the American Soybean Association and a farmer from Magnolia, Kentucky, said, "The remaining tariffs on US soybeans are far from insignificant. Soybeans purchased from our competitors in Brazil and Argentina do not bear such additional costs."

Although in the 2022/23 season, the US accounted for only about 28% of China's soybean imports, China remains a key market for American farmers, accounting for more than half of the US soybean exports.

Reportedly, the trade war initiated by former US President Trump severely impacted US soybean, sorghum, and pork exports to China, creating new opportunities for Brazil.

Luis Rua, responsible for foreign trade at Brazil's Ministry of Agriculture, said that Brazil plans to expand exports of sorghum, pork, and chicken meat and other agricultural products to China to seize market share.

Farmers in Buffalo, Illinois, said, "China will only purchase the amount necessary to maintain supply. If there is a shortage of South American supplies, it will turn to the US."

Harvesting soybeans in Volvo, Wisconsin. IC Photo.

It was reported that recent Chinese buyers have also avoided purchasing US wheat and instead bought 400,000 to 500,000 tons of wheat from Australia and Canada.

American farmers pinned their hopes on trade talks to push China to make purchases, but Even Rogers Pay, an agricultural analyst at Beijing-based consulting firm Trivium China, said that due to the continued existence of trade barriers and uncertainties after the suspension period expires, Chinese importers are reluctant to sign large orders. "Multiple factors constrain this trade ceasefire from becoming a blessing for farmers."

According to data from the National Pork Producers Council (NPPC), during the "ceasefire," the comprehensive tax rate for exporting pork to China still stands at 57% or higher.

The 90-day "ceasefire" will expire before the start of the new sales season for soybeans and corn for American farmers, which is a critical time for exports. Due to lower profits compared to corn, the planting area for soybeans in the US decreased year-on-year this spring.

A soybean pressing company in China said that if the negotiations break down, buyers will face risks when US soybeans arrive during the sales season. "This gamble is not worth it."

Ron Heck, a corn and soybean grower in Perry, Iowa, said, "The situation deteriorated before the trade war and requires action; now the situation remains poor."

During Trump's first term, the trade war caused China to cut back on purchasing US agricultural products, and the Trump administration tried to help affected US farmers through billions of dollars in aid.

Heck said that the problems remained unresolved after the chaos that followed. "We are back at the plate, see if this is a home run or strikeout."

This article is an exclusive piece from Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7504130427918107186/

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