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Trade & Investment

The Soybean Trade Triangle: Argentina, China and U.S.


China imports 60% of global soybeans (graph from Rabobank , data from USDA, UN Comtrade)

Do not get dizzy with this triangular trading game.

Bloomberg reported on Nov 27 that “Argentina replaces China as (the) biggest US soybean buyer”, compared with “none in the same year-ago period, USDA data show …”

On the other hand, “Argentina’s soybean exports will grow 15.4 million tonnes in the 2018-9 harvest season … That was four times more than last season …”

According to this Reuters’ report, the Buenos Aires Grains Exchange said “China is the world’s largest importer of soybeans, and has been forced to look for alternative suppliers during a trade dispute with Washington that has cut off its purchases of U.S. exports (of soybeans).”

“Normally,” the Bloomberg report explained the rationale behind this new game, “Argentina processes its own soybeans to export meal and oil. But with China on the hunt for non-American oilseed, it’s shipping out more raw beans and buying more from the U.S. to feed its crushers …”

Here are the interesting points to note. Firstly, Argentina greatly benefits from this game. By launching a 10-11% tax on grain exports, “President Mauricio Macri said he would ask exporters who have benefitted from a collapse in the peso to do more to help the country eliminate its primary fiscal deficit next year …”

Secondly, as the US farmers are provided with “a $6 billion bailout” by the Trump administration per CNBC report, they have no big problems, too, Do not forget that without China, they can now sell soybean to Argentina instead.

Thirdly, diplomatically speaking, the one who gains tactically from this game is China. It is because China can take this chance to become more influential in Latin America.

Finally, President Trump is doubtlessly the biggest winner. He dares to confront China by igniting a trade war, he has his campaign promise honored, he defends the American interest, he is going to make the US great again, and all these will be carved into history. I really mean it.

And this is what we call a “Win-Win” situation.

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About keith K C Hui

Keith K C Hui is a Chinese University of Hong Kong graduate major in Government and Public Administration and the author of "Helmsman Ruler: China's Pragmatic Version of Plato's Ideal Political Succession System In The Republic" (2013).

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