Imposing Taxes on Agricultural Product Imports from the USA Would Bring Little Influence on Corn Market, but Would Make Soybean Meal Prices Maintain at a High Level for a Long Time

By CnAgri2018-06-27 16:13:16 Print Along with the upgrading of China-U.S. trade frictions after Dragon Boat Festival, China announced that it would impose 25% taxes on importing agricultural products (corn, soybean, sorghum, barley, etc) from the USA. It would directly lead to an increase of 300-400 RMB/MT in tax-paid costs of agricultural product imports from the USA.  
 
It was predicted that this policy wouldn’t make corn be in a tight supply in the short term and would bring limited influence on corn prices. Main reasons are:(1) the current supply of corn in the domestic mainly depends on temporarily-stored auction and corn would be in an abundant supply in the short term. (2) total corn imports won’t reduce obviously, and corn imports from the USA would drop, but the imports from other countries would go up. (3) the consumption of corn substitutes would decrease, but slightly. Among imported corn substitutes, only most of sorghum is from the USA. Along with the growing of sorghum import costs, sorghum replacement for corn in feed would reduce greatly. But the highest volume of replacement was predicted to be around 500 MT, taking up a limited proportion, so it would bring relatively little influence on corn prices in the near future.
 
However, if China imposes 25% taxes on importing soybean from the USA, soybean CIF prices will improve greatly. Although soybean meal would be in an abundant supply in the short term and see a limited increase in prices, yet the markets are more worried about continuity of future supply. The situations of a tight supply and a high price would appear in the fourth quarter of 2018 and continue until 2019.