Factbox: US tariff dispute with partners alter global agriculture trade flows

A series of tariffs imposed by the US on its major trade partners since early last year, and retaliatory actions have altered global agriculture trade flows and allowed other suppliers to make inroads into markets traditionally dominated by the US.

Tariff and weather issues have led to most analysts lowering their estimates for US soybean and corn production this season, while US wheat output is expected to stay flat.

The US introduced tariffs on billions of dollars' worth of Chinese goods in March 2018.

China retaliated by slapping its own tariffs on various US goods imports in July 2018, including a 25% tariff on soybeans. China is the world's largest soybean importer, and is also the biggest market for US soybeans.

The US and China recently agreed to resume trade talks, but uncertainty still prevails.

Most of the top global agribusiness trading houses have identified the US-China trade dispute as a major risk to their bottom line and operational revenues this year.

TRADE FLOWS

Soybeans

** After China imposed tariffs, soybean shipments from the US to China fell 81% year on year to 5.4 million mt between July 2018 to March 2019, according to the US Census Bureau.

**This gave Brazil a chance to make inroads into China. Brazil's soybean exports to China rose 31.9% year on year during July 2018-March 2019 to 47.9 million mt, according to Brazilian Secretariat of Foreign Trade data.

**Since the trade dispute started, share of the US soybean in Chinese market dropped to 8% during July 2018 - March 2019 period, from 34% a year earlier. Brazil market share jumped to over 85% in China's soybean imports between July 2018 and March 2019, from 55% a year earlier, according to the data by General Administration of Customs China.

Corn

**According to European Commission data, US corn exports to the European Union dropped more than 50% year on year to 282,000 mt during July 2018-March 2019, after EU imposed 25% tariffs on US corn in June 2018.

**US slipped to become the eighth largest corn exporter to the EU in the 2018 19 marketing year (July-June) from the third-largest in the previous year, data from the EU Crops Market Observatory showed.

**Corn exports from Canada to the EU in the July 2018 - March 2019 period surged by 149% year on year to 1.4 million mt, according to the EU Crops Market Observatory data.

**Ukraine, the largest corn exporter to the EU, saw its shipments growing 96.6% year on year to 15.4 million mt in the 2018-19 marketing year (July-June), according to European Commission.

Wheat

**US export sales to China plunged by 95% to 42,000 mt in the July 2018-March period, from 902,000 mt in the previous year, according to U.S. Wheat Associates data.

**Canada, meanwhile, sold 1.6 million mt of wheat to China over the same period, almost double year on year, and the highest level in at least 14 years, data from the Canadian Grain Commission showed.

PRICES

**Most-active CBOT soybeans futures fell to $8.12 a bushel on Sept. 3, 2018 from $10.26 a bushel on June 1 losing 20.9% of value over a three months period when China's tariffs on US soybeans came into effect.

**Most-active CBOT corn futures remained stable relatively over the same period, from $3.97 a bushel on June 1, 2018, to reach $3.37 a bushel on Sept. 3, 2018.

**Most-active CBOT wheat futures declined to $4.85 a bushel on Sept. 3, 2018 from $5.38 a bushel on June 1.

INFRASTRUCTURE

Soybeans

**S&P Global Platts Analytics estimates US soybeans production at 113.1 million mt in the 2019-20 marketing season (September-August), down 8.5% year on year.

**Brazil's soybeans production in 2019-20 is expected to jump 5% to 123 million mt in 2019-20 (October-September) from 2018-19, according to the USDA.

**China's soybeans imports in 2019-20 (October-September) are expected to increase 2.4% year on year to 87 million mt, according to the latest USDA estimates. China's 2018-19 imports are estimated to decline by 9.7% from a year ago, led by reduced buying of US soybeans.

Corn

**US corn production is estimated to fall 7.2% year on year in 2019-20 (September-August)

to 340 million mt, according to Platts estimates.

**While 2019-20 (March-February) corn production in Brazil would remain flat from the past year, Argentina, another major producer of the coarse grain, is expected to see its output increasing 2% year on year, according to USDA data.

Wheat

**US wheat production is expected to remain almost flat in 2019-20 (June-May) from the past year levels, hitting 51.78 million mt, according to the USDA.

**The EU is expected to produce 150.6 million mt of wheat in 2019-20 (July-June), up 9.9% from 2018-19, Platts estimates.

**Canada's wheat output is expected to grow 6.6% on year to 33.8 million mt in 2019-20 (August-July), according to Agriculture and Agri-Food Canada estimates.

--Rohan Somwanshi, rohan.somwanshi@spglobal.com

--Asim Anand, aanand@spglobal.com

--Shikha Singh, shikha.singh1@spglobal.com

--Edited by Debiprasad Nayak, debiprasad.nayak@spglobal.com