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How Argentina is Winning the U.S.-China Trade War

Jan. 30, 2019. How Argentina is Winning the U.S.-China Trade War. BY POLITICO PRO DATAPOINT STAFF Argentina’s soybean industry has become a roundabout winner in the

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How Argentina is Winning the U.S.-China Trade War

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  1. Jan. 30,2019 How Argentina is Winningthe U.S.-China TradeWar BY POLITICO PRO DATAPOINT STAFF Argentina’s soybean industry has become a roundabout winner inthe U.S.-China trade dispute. Since the Chinese government levied tariffs on U.S. soybeans in July 2018, U.S. exports to China have fallen significantly, while soy exports from Argentina to China have increased. Argentina is taking advantage of weakened U.S. soybean prices to propel its own soyexports. Brazil – the leading seller of soybeans to China – stands to gain the most over the long run if the trade warpersists. Sources:USATrade database,U.S.CensusBureau, USDAForeignAgriculturalService, Centrode Economía Internacional, UN Comtrade, POLITICO Pro reports, Reuters, Oil World, CMEGroup

  2. Plummeting U.S. soybean shipments to China open door for competition in SouthAmerica PEAK EXPORTMONTHS $3.5 Monthly soybean shipments from the U.S. to China, byyear BILLIONS OFDOLLARS 2013-2017AVG. $3.0 2018value ’13’14’15’16’17 $2.5 Soybean shipments to China typically peak in either October or November. The total peak value of shipments from 2013 to 2017 ranged from $2.7billion to $3.5 billion. In Oct. 2018,only $0.1 billion worth of soybeans were shipped toChina, 97 percent below the 2013 to 2017 Octoberaverage. In the first half of 2018, U.S. soybean exports to China tracked similarly withshipments in recent prior years. However, beginning in July, when the tariffs came into effect, soybean shipments flatlined — which is normal in summer months — but did not recover for peak export season in the fall. $2.0 2013-17 AVG. $1.5 2018 $1.0 $0.5 $0 JAN. FEB. MARCH APRIL MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC. The U.S. could permanently lose market share as China imports soybeans from other countries. Brazil could convert additional farmland to grow soybeans to meet Chinese demand, and has already increased its soybean exports to China.

  3. Argentina meets domestic demand with cheaper U.S. supply, sells its own soybeans toChina Argentina’s agricultural manufactures exports toChina PERCENTAGE OF ALL SUCHEXPORTS U.S. front-month soybeans futures settlement prices,CBOT MONTHLY AVERAGE PRICE PERBUSHEL Tariffs ineffect Argentina’s primary products exports toChina PERCENTAGE OF ALL SUCHEXPORTS NOV.’18 33% Tariffs ineffect 30% $10.5 Tariffs ineffect 20% 20% $9.5 $9.14 NOV.’18 10.8% 10% 10% $8.5 U.S. soybean prices dropped as fear of Chinese retaliation rose– and once the tariffs tookeffect. 0% 0% $7.5 JAN. ’17 JULY ’17 JAN. ’18 JULY ’18 JAN. ’19 JAN. ’17 JULY ’17 JAN. ’18 JULY ’18 JAN. ’17 JULY ’17 JAN. ’18 JULY ’18 Note: Detailed export data for Argentina unavailable for 2018. Primary products include live animals, fresh product, and oil seeds andfruits. Note: Detailed export data for Argentina unavailable for 2018. Agricultural manufactures include meat, dairy products, coffee, spices, mill products and fats andoils. Note: January average is through Jan. 16,2019.

  4. Year-end sales, new talks may signal progress toward aresolution In December, China announced three purchases of U.S. soybeans totaling 2.63 million metric tons, part of the 2018-19 marketing year. The White House also announced that the U.S. and China would meet over a 90-day period starting Dec. 1, in an attempt to address tradegrievances. Where has the U.S. sent its soybeansinstead? YEAR-OVER-YEAR CHANGE, JANUARY TO OCTOBER2017-18 +$362M Argentina +$726M Egypt +$886MEU China $5.2 billiondecrease (63 percentdrop) +$1.70B 39countries Exports to 24 other countries combined for a $110 millionloss Net loss of $1.6billion Note: International data on soybeans shown in this article are based on Harmonized System code numbers. These codes are harmonized, globally, up to the sixth digit. China levied tariffs on two U.S. soybean products at the eight-digit level: 12019010 and 12019020. Data in this article reflect all soybeans classified under the 120190 heading. U.S. data for November 2018, which should have been released Jan. 8, 2019, are unavailable because of a lapse in publication during the governmentshutdown.

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