Chinese soybean buyers could be circumventing soybean tariffs by purchasing them through Argentina. According to export reports, Argentina is buying U.S. soybeans for their domestic market and then exporting their own soybeans to China. An unlikely scenario according to one market analyst, who cites drought leaving Argentina’s grain stocks in short supply.
“The issue here is that Argentina doesn't have the beans,” says Joe Vaclavik of Standard Grain. “They had a short crop this year.”
In addition, Vaclavik says Argentina usually crushes the majority of their soybeans and they typically don’t export soybeans this time of year.
“It looks as if they're going to get the soybeans from the United States,” he explains. “They've booked 850,000 metric tons of beans since September 1.”
According to Vaclavik, Argentina didn't sell any soybeans to China from September to February last year. However, this year, the South American country plans to ship 1.8 million metric tons during that same period. Even if the U.S. beans are not sold directly to China, the export market is still helping prices, he says.
Farmers have long suspected China purchasing soybeans through “grey” market channels.
“Nobody expected that China would ever go this long and not have to buy some soybeans,” says Garry Niemeyer, an Illinois farmer and former president of the National Corn Growers Association. “Maybe they are getting U.S. soybeans through the back door from other countries. That’s as aggravating as not getting a legitimate tariff deal done.”