China could potentially come looking for more soybeans and canola from Canada if Donald Trump’s policies jeopardize U.S. sales to the world’s largest soybean importing country.
The president-elect has clearly shown a willingness to challenge China, whether by it’s by phoning Taiwan’s president, airing his grievances on Twitter, or promising to label China as a currency manipulator.
With soybeans close to the top of the list of U.S. exports to China, there’s a possibility Trump’s policies will disrupt traditional oilseed trading relationships.
“It wouldn’t surprise me that we hear, if trade frictions start to escalate, that China starts to announce sales cancellations and to redirect business elsewhere,” says Mike Jubinville, president and lead analyst with Pro Farmer Canada.
With a large crop on the way, the Chinese would probably look to South America for supplies in the near future, but Canada could also be an option.
“If trade relations deteriorate between China and the United States, they’re going to be looking for alternatives. Whether it’s Canadian soybeans or canola, I think it has potential to pick up some business out of this scenario,” notes Jubinville.
While that could result in larger Canadian volumes going to China, the value of North American oilseed crops would likely drop simultaneously.
“The converse thing, if this trade friction escalated, you’d see soybean futures prices collapse, and that might be detrimental to us…there’s potential for volatility here and nobody knows how it’s going to play out.”
Trump has yet to name his ag secretary, but appointments to key positions regarding U.S.-China trade relations have sent mixed signals.
Robert Lighthizer, who was announced as chief trade negotiator on Tuesday, is a strong critic of China’s policies. However, the earlier appointment of Iowa governor Terry Branstad as ambassador to China was seen as friendly for U.S. soybean trade, as Branstad has had long relationship with Chinese leadership, which has included promoting soybean exports from his home state. (Sara Wyant of Agri-Pulse discussed this here.)
We chatted with Mike Jubinville of Pro Farmer Canada at St. Jean Farm Days in southern Manitoba this week, as heard on Thursday’s edition Real Ag Radio on Sirius XM Channel 147. Jubinville will also be sharing a keynote presentation at CropSphere in Saskatoon next week.