According to a report on the Singapore Lianhe Zaobao website on April 11, the escalation of the Sino-US trade war has affected China’s purchase of US agricultural products, and Chinese soybean traders have turned to buying large quantities of Brazilian soybeans this week.
According to Bloomberg, Chinese importers purchased at least 40 cargo ships of soybeans from Brazil in the first half of last week. People familiar with the matter said that these buyers took advantage of the recent decline in Brazilian soybean prices to quickly place orders for purchases.
Behind China’s purchase of Brazilian soybeans is the resurgence of the Sino-US trade war. As China imposes tariffs on US products, US soybeans are no longer the best choice for Chinese buyers.
At the same time, in the field of soybean imports, China has long built a diversified supply chain, with soybeans from South American countries such as Brazil and Argentina continuously imported, and the United States is no longer the only choice.
This action clearly sends a signal: After systematically filling the soybean gap, China will no longer be passive due to the policy constraints of a single country.
Soybeans, a crop that we do not directly eat, seem to be far away from the Chinese table, but in fact they are an indispensable and important part of the Chinese people’s catering structure, directly affecting our food safety and dietary structure.
Soybean is the core raw material for edible oil, soy products and animal feed – soybean oil accounts for about 40% of my country’s edible vegetable oil consumption; soybean meal is the core feed raw material for pig and poultry farming, accounting for 70% of the source of feed protein, directly related to the supply of meat, eggs and milk for 1.4 billion people.
But for a long time, soybean supply has been the most vulnerable “shortcoming” in China’s food security.
Thirty years ago, China’s dependence on foreign soybeans was still negligible. In 1995, China imported only 293,900 tons of soybeans. However, since then, with the sharp increase in China’s demand for soybeans in agriculture, animal husbandry and food industries, China’s soybean imports have increased day by day, gradually becoming the world’s largest buyer.
In 2024, China will consume about 117 million tons of soybeans, of which about 90% rely on imports.
In 1955, my country’s annual meat consumption was only 6.1 kg; in 1985, this figure increased to 16.6 kg; in 1995, it increased to 33.5 kg; in 2024, China’s annual per capita meat consumption will be 72.72 kg, more than four times that of 40 years ago.
In 1995, the average annual milk consumption of Chinese people was 5.68 kg; in 2024, this figure has become 41.5 kg, eight times that of 30 years ago.
In 1995, China’s poultry egg production was 16.7666 million tons; in 2024, this figure became 35.88 million tons. Last year, the average annual consumption of Chinese people was about 280 eggs, and the annual total consumption reached 400 billion eggs, ranking first in the world.
While demand has surged, domestic soybean production, as the core protein source of meat, eggs and milk, has never kept up. In the past 20 years, the proportion of domestic soybean production to consumption has fallen from nearly 40% to less than 20%.
From the US side. It is to use superior technology, production capacity and large government subsidies to continuously attack China’s fragile soybean supply chain, thereby occupying the initiative in the industrial chain, and even taking various unconventional measures to attack Chinese growers with weak risk resistance.
For example, the most typical “soybean war” occurred in August 2003, when the US Department of Agriculture suddenly released a report saying that due to weather conditions, US soybean stocks would fall to the lowest level in 20 years. This report caused the Chicago Board of Trade (CBOT) soybean futures price to soar from 540 cents/bushel to 1060 cents in April 2004 (equivalent to about 4,400 yuan/ton), an increase of nearly 100%.
In the panic rise, Chinese crushing companies made misjudgments. In March 2004, Chinese companies formed a large purchasing group to go to the United States and signed a long-term purchase contract for 8 million tons of soybeans at a high price of 4,300 yuan/ton, accounting for 40% of China’s annual consumption at that time.
But only one month later, the US Department of Agriculture suddenly announced that there were errors in the previous data and expected a bumper soybean harvest in 2004, causing the international soybean price to plummet to 2,200 yuan/ton, a drop of 50%.
At this time, Chinese companies faced a dilemma: executing the contract would result in a loss of 2,000 yuan per ton, and breaching the contract would require huge compensation. In the end, 70% of the companies chose to breach the contract, but were collectively sued by international grain traders for 6 billion yuan and were subject to a global procurement ban.
The procurement ban and price advantage made it difficult for Chinese crushing companies to resist. By the end of 2004, the number of industry companies had dropped sharply from more than 1,000 to 90, of which 64 were controlled by four major grain traders such as ADM and Bunge, and foreign capital controlled 85% of China’s crushing capacity.
From China’s perspective, the main thing it can rely on to counter this situation is its market purchasing capabilities.
In 2018, the Trump administration launched a trade war against China based on the trade deficit and other reasons, and imposed tariffs on a large number of Chinese goods exported to the United States.
China quickly took countermeasures and imposed tariffs on American goods. Soybeans, as an important agricultural product exported by the United States to China, were the first to be caught up in this trade storm. At that time, China’s tariff on American soybeans was raised to 25%, which seriously damaged the entire American soybean industry.
According to data from the U.S. Department of Agriculture, U.S. soybean exports to China fell sharply by 50% in 2018, with economic losses of up to $2 billion.