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Chinese tariffs have impact on some local farmers

16 July 2018

Ethiopia's oilseed sector plays an important role in generating foreign exchange earnings for the country, according to a June 14 Global Agricultural Information Network (GAIN) report from the Foreign Agricultural Service of the U.S. Department of Agriculture. US farmers will export 250 million fewer soybean bushels than predicted earlier this year. They are instead loading up on Brazilian soybeans, which now sell at a premium of up to $1.50 a bushel as USA soybean futures have fallen 17 percent over six weeks to about $8.50, their lowest level in almost a decade.

Soybean prices remained in the doldrums on Thursday.

All the same, the average price for this year's US soybean crop was forecast at $9.25 a bushel, 75$ lower than a month ago and the lowest in four years.

"It seems irrational, but there is a possibility if prices in Chicago (futures) approach the $8 level", said Alessandro Reis, head of origination and logistics at CJ Selecta, a soy processor and trading firm in Brazil. The USDA report identified the ongoing trade disputes as the root cause of the soybean export decline.

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USA farmers are expected to harvest 4.31 billion bushels, up 30 million bushels from 2017, according to USDA's National Acreage Statistics Service or NASS.

China National Grain and Oils Information Center said China's 25 percent import tariff on United States soybeans will increase U.S. soybean import costs to between 700 yuan ($105) and 800 yuan per metric ton, which is around 300 yuan higher per ton than the same shipments from Brazil. Chinese soybean imports were forecast to fall by 8% during the 2018/19 marketing year despite larger shipments from Brazil, already the world's largest soybean exporter. The revised forecast predicts its imports will drop 8%, or about 294 million bushels. In retaliation, China placed tariffs on several goods, including soybeans. About half of total soybean production is said to come from these bigger commercial operations, some of which are rotating or inter-planting soybeans with other crops.

"The tariff that China recently imposed on USA soybeans is expected to cause higher prices for soybeans in China", said USDA analysts in the monthly WASDE report. Producers have had yields far above that in recent years, meaning there is a cushion, but it's getting thinner, Stark added. It costs the average soybean farmer an average about $415.11 per acre in input and operating costs to plant and harvest a field.

Chinese tariffs have impact on some local farmers