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The Soybean Import Cost Would Increase by 600 RMB/MT to 700 RMB/MT If 25% Tariff Were Imposed on the Soybeans

China Agriculture Report By CnAgri2018-05-16 09:48:56China Agriculture Report Print
Keywords:Oilseeds Grains Feed
If China confirmed to implement 25% tariff on American soybeans, the American soybean import would suffer a great impact. China wouldn’t be able to find a direct alternative source of imports for about 30 million tons of soybeans from October to the next March. Although some soybean meal could be replaced by other mixed meals by changing the feed formula, the domestic soybean meal price increase would be inevitable. Therefore, the most direct impact would be price increases of meat, eggs, animal and poultry products. The highlights are the following aspects:
A.If 25% tariff were imposed on the American soybeans, the theoretical cost of the imported American soybeans would increase by 600 RMB/MT to 700 RMB/MT. The theoretical cost of the recent American soybeans which arrived at port would is over RMB 3,100/MT. The cost would be over RMB 3,700 after the tariff were imposed, up about 20%; as a result, the soybean meal prices would increase by over RMB 400, up about 12%. According to the proportions of the soybean meal in the feed cost, the cost of hog farming would increase by about 3%. At present, the theoretical average cost of hog farming is about 13 RMB/kg. After the tariff increase, the hog farming cost would increase by about RMB 0.2 RMB/kg.
B.The increase of the soybean import cost would affect the CPI through the prices of grains, vegetable oils and feed. Theoretically estimated, this would boost the CPI by 0.28% which is an acceptable price increase.   
C.If soybeans were involved in the sino-US trade war, the soybean crushing enterprises’ procurement, production and sales plans would be disrupted; the feed enterprises’ feed formula, raw material procurement and production would also be disrupted; however, the upstream cost would eventually be added to the farming link. For example, the present average hog farming loss is 258 RMB/head. If the feed cost increased by 2% to 3%, the deficit would increase to 280 RMB/head. As a result, a large scale hog farm of 10,000 heads would lose an extra amount of RMB 220,000 in the trade war. 
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