Tariff hike delay has helped out ag shippers, but not for long
- After a precipitous drop in December, Soybean shipments to China picked up in January due to the trade war cease-fire set to last until March 1, unless the U.S. and China can strike a deal.
- According to BIMCO analysis of USDA figures, 754,609 metric tons of soybeans were ready to be shipped in China in January. In December that number was just 25,347 metric tons.
- “Political promises are beginning to materialise in a trade that has faced huge uncertainty since the start of the trade war. This is good news for the struggling dry bulk market as it generates a much-needed increase in tonne-mile demand," Peter Sand, BIMCO’s chief shipping analyst, said in an analysis.
China buys roughly 60% of U.S. soybeans. Farmers, traders and even carriers have been at the mercy of the Trump administration for months now as the trade war stretches on.
And it's not just what farmers are able to sell and ship that is dependent on the U.S. trade relationship with China. Right now, U.S. farmers are staring down the barrel of planting season. They need to choose and purchase seed and inputs for the coming spring and are looking to the USDA figures to gauge which crops are still moving around the globe, with the understanding that big policy shifts could happen at any moment.
Since the end of the government shutdown, payouts to farmers to make up for tariffs are now being delivered and buoying farmers sentiments, according to Purdue University's Ag Economy Barometer, a monthly survey. According to Purdue, farmers are sticking with soybeans despite the uncertainty.
“In a politically unstable environment, uncertainty for the future of this trade remains high and US farmers therefore face difficult decisions as to what to plant for next season,” Sand said, warning that if tariffs on $200 million in Chinese imports do rise on March 2, it is likely American soybeans will no longer be price competitive with Brazilian crops.
- BIMCO Trade war cease-fire is good for the dry bulk sector
- Supply Chain Dive How to navigate the 90-day tariff 'cease-fire'
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