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China working on waiving tariffs on some imports of US soybeans, pork

China working on waiving tariffs on some imports of US soybeans, pork

New Delhi : China is looking to implement tariff waivers on some purchases of soybeans and pork from the US, China’s Customs Tariff Commission of the State Council announced Friday.

However, this may not mean a rise in purchases from the US, sources told S&P Global Platts.

China in 2018 imposed retaliatory tariffs on several import items from the US, including soybeans and pork. The Chinese government later imposed additional tariffs on beans and pork, taking the total duties on soybeans to 33% and on pork to 72%.

But following multiple rounds of talks and negotiations this year, the Chinese government in July started releasing tax-free quotas to crushers for buying soybeans, as a goodwill gesture.

Chinese crushers were recently heard requesting more import tax-free quotas on US soybeans after they reportedly exhausted their existing quotas, totaling around 10 million mt.

RISE IN PURCHASES UNLIKELY

However, the latest announcement from the Chinese government does not mean increasing agriculture purchases from the US, sources said.

Chinese soybean importers are still waiting for the government to approve their requests for more tax-free quota on US soybeans, but none of them has been allowed to increase imports from US, the top five crushers in China told S&P Global Platts.

A trader from a top international grain trading company based in Shanghai confirmed that the announcement applies to soybeans and pork that were purchased earlier.

The tariff waivers will be implemented subject to individual applications, according to the Customs Tariff Commission of the State Council. It did not specify the exact volumes for the waivers.

“The crushers have the demand to buy US competitive soybeans to cover its December to January demand, as South American old crops supply was limited with higher premium over US-origin soybeans,” a crusher said.

The US December-January shipments were at a discount of 25-30 cents/bushel ($9-$11/mt) to South America-origin soybeans, according to S&P Global Platts data.

China is the world’s largest soybean importer and accounts for 64% of the global bean purchases.

China’s retaliatory tariffs led to a decline in US soybean exports to the Asian country, falling 77% year on year in the 2018-19 marketing season (September-August) to 6.7 million mt, according to the US Department of Agriculture.

China’s imports of US soybeans in October fell 33% month on month to 1.2 million mt, according to Chinese customs data.

China is expected to import 85-87 million mt of global soybeans in 2019-20, according to Platts Analytics.

Despite retaliatory tariffs remaining in place on US pork in China, tariff exemptions and high Chinese pork prices are expected to boost US sales in 2020, the USDA had said earlier.

According to the latest USDA export sales data, 2019 accumulated exports of US pork to China reached 302,400 mt on November 28, up from 22,300 mt from the same period a year ago. Accumulated exports include outstanding sales plus shipments that have already left the ports.

China’s pig population has been hit by the African swine fever outbreak, first reported in the country in August 2018.

Pork prices in China hit a record high in October, reaching Yuan 41.75/kg ($5.94/kg), and has cooled off slightly since then, according to JCI China.

However, pork prices still remain at inflated levels from the start of 2019, when prices were below Yuan 15/kg.

The US is the world’s third-largest pork producer and the second-largest exporter, while China is the largest consumer and importer.