Trump won the U.S. presidential election the following month in a comeback that is likely to reignite trade tensions between Washington and Beijing.

According to traders and analysts, tariff threats in Trump’s campaign speeches have led some Chinese importers to shun U.S. shipments starting in January.

China, the world’s largest soybean buyer, imported 541,434 metric tons of soybeans from the United States last month, up from 228,253 tons a year ago, according to the General Administration of Customs data on Wednesday.

However, the bulk of China’s imports for October came from Brazil, with 8.09 million metric tons imported overall.

Arrivals from the U.S have been surging since April, and China is on track for a record soybean import this year due to a rush to stockpile U.S beans. As of the January-October period, total soybean imports stood at 89.94 million tons.

Arrivals from Argentina for the month surged to 1.36 million tons from 1,077 tons a year earlier.

Imports from larger producer Brazil in October rose 15 per cent to 5.53 million tons from last year.

Total shipments from Brazil over January-October rose 13.6 per cent year-on-year to 67.8 million tons. Arrivals from the U.S. fell 13 per cent to 15.1 million metric tons.

China’s soybean imports are expected to drop to 98.8 million metric tons for the year ending September 2025, down from 109.4 million tons the previous year, According to an executive from China National Cereals, Oils and Foodstuffs Corporation.

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The Argentina government launched its latest “soy dollar” plan on Monday to boost dollar inflows from soybean exports and replenish dwindling foreign exchange reserves, in a delicate economic context with annual inflation over 100 per cent.

In the first four days of the program, which offers an exchange rate of 300 pesos (C$1.86) per U.S. dollar for soybean sales — compared to the official rate of 215 pesos per U.S. dollar — producers sold 441,747 tonnes of soybeans, the exchange said.

The figure is well below the volume sold in the first four days of the two previous “soy dollar” plans last year. In the first, last September, 3.1 million tonnes were sold. In the second, in November, sales totaled 1.1 million tonnes.

Emilce Terre, the Rosario exchange’s chief economist, attributed the disappointing numbers to a drought between early last year and March that has caused the current soybean harvest to be estimated at its worst in almost a quarter of a century.

“This latest program finds us in a very different situation (from the previous ones): Yields are the worst in 25 years. The planting area lost is at a record. There are production losses that have produced a worse-than-normal availability of soybeans,” said Terre.

While the two prior “soy dollar” plans traded on the 2021-22 soybean season, which had a harvest of 42.4 million tonnes, the current plan is trading on a harvest projected at 23 million tonnes, according to the exchange.

Last month, the head of the CIARA-CEC chamber of exporters and oilseed producers told Reuters that the sector was in crisis as its idle capacity rate was at its highest level ever due to the drought.

— Reporting for Reuters by Maximilian Heath in Buenos Aires.

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The central bank said soy farmers over a certain size who hoarded their stock would face a minimum financing rate “equivalent to 120 per cent of the latest Monetary Policy rate.”

Argentina’s benchmark interest rate stands at 69.5 per cent.

Thursday’s announcement aims “to make credit more expensive so that it is more convenient to sell (soybeans) than to take credit,” a source familiar with the matter explained.

The source added that now “the rate of any line of credit is going to be more expensive” for soybean producers, whose minimum rate would start at 83.4 per cent under the new policy, the source said.

The move comes as part of an effort by authorities to replenish dwindling foreign currency reserves by pressuring soybean farmers to export more.

On Sunday, Economy Minister Sergio Massa set a preferential exchange rate for soybean producers, sending soybean exports surging earlier this week.

Argentina is the world’s top exporter of processed soy oil and soymeal and the No. 3 for raw soybeans, but farmers have been holding onto stock as a hedge against inflation and potential devaluation of the local peso currency (100 pesos = 93 Canadian cents).

— Reporting for Reuters by Maximilian Heath; writing by Adam Jourdan and Brendan O’Boyle.

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Statistics Canada’s 2019-20 principal field crop acreage report, released April 24, estimated 5.65 million acres of soybeans are to be planted in 2019. That’s a 10.6 per cent drop from 2018, but on par with the acres planted four years ago.

Ron Davidson, the executive director of Soy Canada, said producers had two terrific years that resulted in acres increasing dramatically from 2016.

Statistics Canada data indicated there were 7.28 million acres of soybeans grown in 2017 — a jump of 30 per cent from the previous year. Those acres produced nearly 7.64 million tonnes of soybeans, with Ontario producing half.

Soybean acres in 2018 slipped to approximately 6.32 million acres for about 7.18 million tonnes produced. Of that, in excess of 58 per cent of production was in Ontario.

There is a possibility of soybean acres increasing in at least some areas of the country. Wet conditions, such as what southern Ontario has seen this spring, could see farmers switch from corn to planting soybeans, said Rob Gamble, chief economist for Grain Farmers of Ontario.

“For the next 14 days it looks like the weather could turn a bit for the better. If the spring continues to be wet and delays corn planting, producers could potentially make that switch to soybeans,” he said.

Recently, China has impeded soybean imports from Canada. Reports stated inspections by Chinese officials that normally took a couple of days were now taking a few weeks. Also, China claimed to have found ants in at least one shipment.

“Officially, the Canadian government has not received information regarding any problems with Canadian soybean exports to China,” Davidson said.

Since the beginning of January, soybean exports have slowed to a trickle with only 11,000 tonnes sent to China, according to the Canadian Grain Commission. At the end of December, Canada shipped about 3.06 million tonnes to China, with over 666,000 tonnes exported that month alone.

Gamble indicated farmers could further alter their planting intentions because of uncertainty surrounding China.

“If the (situation) got worse with respect to China or the current price decline continues further, you can see changes for sure,” he said.

Davidson noted China imposed a 25 per cent tariff on U.S. soybeans, which forced a steep drop in prices between May and July 2018.

“Canada does have a basis, which lets our price vary a little bit from U.S. prices. We were severely impacted by the world prices on the market,” he said.

So far this week alone, soybean prices on the Chicago Board of Trade have been sliding downward. At the close of trading Thursday, soybeans lost more than eight cents to close at US$8.43 per bushel.

— Glen Hallick writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

Table: Soybean planted-area projections for 2019 by province, in thousands of acres. Source: Statistics Canada.

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USDA reported nearly three million tonnes of U.S. soybean export sales on Tuesday, mostly to China, after high-level talks last week between the U.S. and China ended with a vow by Beijing to buy five million tonnes of U.S. soybeans.

Corn prices firmed and wheat ended mixed as traders squared positions ahead of the announcement of a backlog of USDA crop reports on Friday that were delayed by the partial U.S. government shutdown.

“The soybean sales were already baked in and now we’re looking forward to any news in the crop report coming up on Friday. After that we’re looking for what happens with the upcoming Trump-Xi meeting. It’s a market that’s just handcuffed right now,” said Don Roose, president of U.S. Commodities.

Chicago Board of Trade March soybean futures were 1-3/4 cents higher at $9.20-1/4 a bushel, March corn was up 1-1/2 cents at $3.80-3/4 a bushel and CBOT March wheat rose 1-1/2 cents to $5.27-1/4 a bushel (all figures US$).

Traders are hopeful that progress is possible in talks to end the U.S.-China trade war, which has hugely cut U.S. soybean exports to China.

Friday’s USDA data will include wheat sowings, U.S. and South American corn and soybean production, U.S. grain stocks and world crop season ending stocks.

Grain traders are also monitoring weather in South America, following hot and dry conditions in parts of Brazil this season and overly wet weather in Argentina that have dented yield prospects. Weather conditions in both countries are improving, forecasters said.

Brazil’s soy harvest in the second-largest producing state of Parana is well ahead of last season, with limited damage to the fields from a drought in December, state agricultural research body Deral said on Tuesday.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago; additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore.

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Argentine officials were in Beijing on Friday finalizing the paperwork needed to ship the country’s livestock feed to China, ministry Chief of Staff Santiago del Solar said in an interview.

The South American country is already the world’s top exporter of soymeal livestock feed.

Beijing in June placed retaliatory tariffs on imports of U.S. soy, which may leave the massive Asian market open to new suppliers of soymeal feed needed to produce the steaks and hamburgers demanded by the country’s growing middle class.

“If the U.S. shifts away from exporting soymeal to China, that’s an opportunity,” del Solar said.

U.S. President Donald Trump said recently he expects more soy exports to go to Europe. But del Solar downplayed worry that the United States will elbow Argentina out of its traditional soymeal markets like the European Union, Vietnam and Indonesia.

“It’s not easy to shift from one market to another,” del Solar said, referring to the new trade routes that the United States may develop due the trade wars. Argentina, he said, is ready to compete thanks to its good export logistics.

Eighty percent of Argentine soy is grown within 300 kilometers (186.41 miles) of the Rosario export hub, with its crushing plants and port facilities ready to take cargoes down the Parana River to the shipping lanes of the South Atlantic.

“The Americans are leaving one market and going to another. But they are not going to double production,” del Solar said.

“It’s like musical chairs,” he added. “You can’t be here and there at the same time.”

If Beijing approves Argentina’s application this year, as expected, Argentina will have a limited amount of meal to immediately send to China due to the drought that hobbled the 2017/18 soy season. But del Solar said he expects farmers to increase plantings from the 17.1 million hectares sown with soy in the recently harvested 2017/18 crop year.

“We expect farmers to plant more soybeans than last year. It’s going to be more,” de Solar said. Sowing starts in October.

Argentina exported a total 28.3 million tonnes of soymeal in 2017, according to official data. About 33.4 percent, or 9.4 million tonnes, went to the EU. The next-biggest market was Vietnam, which imported 3.9 million tonnes of Argentina soymeal, and Indonesia, which bought 2.9 million tonnes.

– Additional reporting by Maximilian Heath in Buenos Aires.

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The plan will see the tax cut by one half percentage point per month for 24 consecutive months.

“The reduction is one of a number of measures taken over the last two years to increase competitiveness and predictability in the sector,” the statement said.

Soon after his December 2015 inauguration, President Mauricio Macri chopped the soybean export tax to 30 percent from 35 percent. He said he wanted to get rid of the levy altogether, but that his government needed the revenue raised by the tax in order to reduce Argentina’s wide fiscal deficit.

The government is also cutting the export tax on soyoil and soymeal, down as of this month to 26.5 percent from a previous 27 percent. Under the plan, the levy on soy derivatives is due to fall to 15 percent by 2020, the ministry’s statement said.

Argentina is the world’s top exporter of soymeal livestock feed and its third biggest supplier of raw soybeans.

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A trade delegation from Minnesota, one of the largest U.S. agriculture states, vowed to carry on with its planned visit to Cuba next week. “We’re going to continue to beat the drum and let them (the Trump administration) know that trade is good for agriculture,” said Kevin Paap, a farmer in the delegation.

Trump signed a presidential directive on Friday rolling back parts of former President Barack Obama’s opening to the Communist-ruled country after a 2014 diplomatic breakthrough between the two former Cold War foes.

Farm groups saw the move as a step backward in what had been an improving trade relationship between the two countries which are just 145 km apart, even though agriculture is not directly targeted.

U.S. law exempts food from a decades-old embargo on U.S. trade with Cuba, but cumbersome rules on how transactions were executed have made deals difficult and costly.

Since Obama’s detente, substantial headway has been made, however, with shipments of U.S. corn and soybeans to Cuba soaring 420 per cent in 2016 from a year earlier to 268,360 tonnes, U.S. Department of Agriculture data shows.

Through the first four months of 2017, total shipments of U.S. grain and soy were 142,860 tonnes, up from 49,090 tonnes during the same period of 2016.

While the quantities are dwarfed by total U.S. exports — nearly 56 million tonnes of corn alone last year — the added volumes were welcome as farmers face a fourth year of languishing grain prices and crimped incomes.

“At a time when the farm economy is struggling, we ask our leaders in Washington not to close doors on market opportunities for American agriculture,” Wesley Spurlock, president of the National Corn Growers Association, said in a statement.

The group sees an opportunity for US$125 million more a year in trade to Cuba.

Trump’s move could cut off near-term sales and stymie economic development that would drive longer-term demand growth, said Tom Sleight, president of the U.S. Grains Council, a grain trade development organization, in a statement.

“Neither of those outcomes is favourable for the U.S. ag sector or the Cuban people,” he added.

Paap said the U.S. should be doing more to encourage exports.

“It’s frustrating because we’ve made some advances and built those relationships,” he said.

— Karl Plume reports on agriculture and agribusiness for Reuters from Chicago. Additional reporting for Reuters by Michael Hirtzer in Chicago.

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Wheat futures were flat, retracing losses late in the session on a round of short-covering and worries about a cold snap in key production areas damaging the dormant crop.

Corn futures were slightly weaker, with ample global supplies pressuring prices. Short-covering helped limit the losses in corn.

For the week, Chicago Board of Trade soybean futures were down 0.1 per cent. Corn futures dropped 0.6 per cent this week while wheat was off 1.3 per cent.

The U.S. Agriculture Department on Friday morning said private exporters reported a deal to ship 205,000 tonnes of soybeans to unknown destinations in the 2016-17 marketing year. It was the third flash sale of the week.

“Soybeans are still bullish despite the U.S. and South American harvests,” consultancy Agritel said in a note, stressing the big weekly U.S. export haul.

Analysts were expecting that overseas buyers will turn their attention to South American suppliers in the coming months but any crop deficits from those key production countries will boost demand for U.S. soybeans.

“Rain deficits are building in nearly half of Argentina’s corn and soybean belt but rains are still on the way next week, likely limiting concerning areas to around 20 per cent if precipitation comes through as anticipated,” Matt Zeller, director of market information at INTL FCStone, said in a note to clients.

CBOT January soybean futures were up 7-3/4 cents at $10.36-3/4 a bushel (all figures US$).

The strength in the soy market was capped by technical resistance as prices failed to break through Thursday’s high. A bearish forecast for production in Brazil also limited buying.

Brazilian independent analyst Safras + Mercado raised its forecast for Brazil’s 2016-17 soybean crop to 106.1 million tonnes, 9.2 per cent above the 2015-16 season and 2.5 per cent more than its previous projection in October.

CBOT March corn futures were down 1/4 cent at $3.56-1/4 a bushel and CBOT March wheat was unchanged at $4.09-1/4 a bushel.

Frigid temperatures are expected in the U.S. Plains and Midwest in the coming days, and roughly 20 per cent of the Plains hard red winter wheat crop and 10 per cent of the soft red winter wheat crop is vulnerable to damage, an agricultural meteorologist said on Friday.

— Mark Weinraub is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.

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Soybeans eased as the U.S. Department of Agriculture projected the U.S. crop would be the largest ever harvested. Strong demand, particularly from importers in China, offset much of the pressure.

Wheat recovered from early lows and closed slightly higher on short covering.

“I think that stabbing down into new lows opened the door for a lot of users to do some pricing,” said Roy Huckabay, analyst with the Linn Group.

“The guys have been really slow to cover September. On this break, they have not only reached out and covered their short basis, they have covered their short futures too,” he said.

Chicago Board of Trade September corn futures closed 1-1/4 cents higher at $3.22-1/4 a bushel after sinking as low as $3.12, the lowest point for a spot contract since September 2009 (all figures US$). Actively traded December corn gained 1-1/4 cents to $3.33, ending the week down 0.4 per cent, the contract’s seventh weekly decline in eight weeks.

CBOT September wheat closed up 6-1/4 cents, or 1.5 per cent, at $4.22-1/2 a bushel. It was up 1.6 per cent for the week, its second straight weekly gain. December through September 2017 futures all hit contract lows.

November soybeans were 2-1/4 cents lower at $9.81-3/4 a bushel, ending 0.7 per cent higher than a week ago.

Futures prices slid after USDA projected record large corn and soybean harvests in a monthly report on Friday, with forecasts for both commodities above even the highest analyst estimates.

But the agency also raised its demand outlook, including for exports, which for soybeans have been stellar of late.

On Friday morning, USDA confirmed private sales of 258,000 tonnes of new-crop U.S. soybeans to China, the 12th large soybean sale confirmed by the agency in 13 business days.

For wheat, USDA slashed its outlook for the EU wheat crop following poor summer weather in key production areas of the bloc. But that was offset by bumper wheat crops in the U.S. and the Black Sea region.

— Karl Plume reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Julie Ingwersen.

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