BUENOS AIRES / CHICAGO (Reuters) – A ship named Torrent is nearing the end of a 5,000-mile journey that takes soybeans from the US Great Lakes to Argentina – a journey made solely for US-China trade Economically meaningful is war.
FILE PHOTO: A view shows the port of Rosario, Argentina, on January 1
The ship is scheduled to land on December 4 at the Rosario Crop Hub, days after leaders of the world's top economies, US President Donald Trump and Chinese counterpart Xi Jinping, held trade talks in Buenos Aires to have.
They will gather on the sidelines of a summit meeting of a group of 20 nations, and are expected to discuss how to reverse their "toll-for-tat" tariffs-goods worth hundreds of billions of dollars are and that have distorted the global trade flows.
Torrent's 20,000-ton soybean load is one of those distortions, and only one in 14 vessels that the Argentine soybean breaker Vicentin has undertaken to import US soybeans, according to Reuters approved port data. According to Vicentin's brokerage and port data, previously unreported shipments are among Argentina's first major purchases in the US for two decades as the country's government and industry try to harness the turmoil of the US-China conflict.
Argentina – one of the world's leading exporters of soybeans and the main exporter of processed flour and oil – usually has no reason to import beans. This year, the South American nation has topped the list of US soybean imports, as prices for US beans have fallen 15 percent since the end of May, when China imposed tariffs on them for the first time.
"One of the consequences of the trade war is that American beans have to find a new home," said Thomas Hinrichsen, president of Brokerage in Buenos Aires, J.J. Hinrichsen SA, which shortened the offers for Vicentin. "They're in the money to deliver cheaper US beans to efficient crushers in Argentina."
Beyond the price, Argentina needs US beans to punish its massive soy crushing industry after a drought. What remains of the nation's own crops will feed pigs in China – where buyers pay a premium for South American soybeans to fill the void that has virtually arisen from imports from the US.
"The combination of the drought in Argentina and the flooding of soy in the US caused by the trade dispute has steered US soybeans towards Argentina," said Guillermo Wade, manager of the Argentine Port and Shipping Chamber. "They are used to keep our crushers working while releasing the Argentine soybeans for China."
Marisa Bircher, Argentina's international trade secretary, told Reuters that Argentina intends to export more soy and by-products to India and Southeast Asia. The current top buyers in Argentina include the European Union, Vietnam and Indonesia.
"This US-China conflict is clearly changing the grain trade," Bircher said.
The grain powerhouse is even negotiating a license to export soy flour directly to China – which has so far imported only Argentine beans for shredding in China.
"We have very good relations with China … we are negotiating to open the market for soybean meal before the end of the year," Bircher said.
Argentina levies corporate export taxes on agricultural goods such as soya, corn and wheat, and provides them with much-needed revenue in the midst of an economic crisis.
The country, which is in the limelight globally as the G20 host, has strong relationships with both the United States and China, and has been seeking business with them over the last few weeks as it seeks to seize the opportunities that arise from the war result war.
Aside from finding the soyealeal deal with China, for the first time in 17 years, the company has negotiated an agreement to export beef to the United States.
The torrent, which was loaded a month ago in a Toledo, Ohio, based The Andersons company, is one of 43 US soybean ships sailed to Argentina since July, and the second one from the region the Great Lakes sailed. on the other side of the world from the South American country. Only nine have sailed to China.
A year ago, 282 soybean cargo ships were loaded into the US, which were shipped to China and not to Argentina during that time, according to the US Department of Agriculture.
& # 39; UNNATURAL DESTINATIONS & # 39;
China's soy tariffs, which had virtually stopped the purchase of US soybeans, which totaled $ 12 billion last year, were used in retaliation for Trump's obligations in Chinese steel and aluminum. US farmers and grain traders therefore have huge stocks of soybeans because China usually buys 60 percent of US soybean exports.
Grain companies had to adapt quickly to keep huge quantities of perishables moving at the lowest possible cost.
Bulkware terminals in the US Pacific Northwest, the most direct sales market for Asia-bound shipments, handle one quarter of their normal autumn soybeans. The beans transported there by rail instead travel east to the terminals of Great Lakes or south to the ports of Mexico or the Gulf Coast, which go to countries other than China.
"Bringing soybeans from the US into unnatural destinations – and moving Brazilian and Argentinian soybeans to China instead if they were supposed to get off the US West Coast – brings logistical costs," says Soren Schroder, Chief executive of global grain trader Bunge Ltd ( BG.N ) said in a recent interview with Reuters.
The inefficiencies amount to "many, many millions" of new costs borne by the entire industry, he said.
The changes have also created opportunities for agricultural trade giants such as Bunge, Louis Dreyfus Company and Cargill Inc., which produce cheaper US soybeans in Argentina and Canada. They also sell the unprocessed beans from these countries for a price to Chinese buyers who have difficulty replacing the huge amount of soybeans they normally buy from the United States.
Nimble traders reap big profits, but the odds can be fleeting.
"Everyone comes to Canada's Make America Great Trump soybean train for soybeans," said Dwight Gerling, president of Toronto-based DG Global, a Canadian exporter of soybeans in containers.
Following delivery to China, Canadian soybeans in this case received a premium of up to $ 3 a bushel over the Chicago Futures price, more than double that of US soybeans on export markets.
DG Global has increased soybean sales by 80 percent since the beginning of the year. This is entirely due to the trade battle between the US and China, Gerling said. DG buys cheap US soybeans to send to its regular buyers from Southeast Asia – who would normally buy Canadian soy – and sent its Canadian soybeans to China this fall, a new market for the company.
Sales to China have slowed recently as restrictions on shipping in the winter approached the Great Lakes, Gerling said. Chinese bids for Canadian soybeans are now only slightly higher than bids from other countries for American soybeans.
As companies find new ways to earn money, US farmers in the export-oriented Dakotas face tough trade because prices for their freshly harvested soybeans at local elevators have been the lowest for over ten years.
The concern of American farmers in the US and elsewhere is that even if Trump and Xi reach an agreement in Buenos Aires, the damage to their relationships with Chinese buyers built over three decades is difficult to repair.
"The Chinese may source soybeans from other locations if we are not a reliable supplier," said Bob Metz, a fifth-generation farmer in Peever, South Dakota. "They have 1.4 billion people to feed. They do not want to depend on us.
Additional Reports by Rod Nickel in Winnipeg and Michael Hirtzer in Chicago; Editors: Caroline Stauffer, Simon Webb and Brian Thevenot