China will ramp up imports of Argentine soyaoil after Argentina begins harvesting its next soya crop in March, a government official told Reuters, but talks toward reaching a deal to sell soyameal livestock feed to China have fizzled.
The soyaoil agreement is good news for Argentine crushing plants that manufacture soyaoil and have been hard hit by the US-China trade war. "The Chinese agreed to buy 300,000 to 400,000 tonnes of soyaoil from Argentina," Santiago del Solar, chief of staff to Argentina's agriculture secretary, said late on Tuesday. He said the deal was signed during President Xi Jinping's state visit at the weekend.
That compares to 120,000 tonnes of soyaoil sent to China over the last three years, del Solar said, and would be worth $185 million to $250 million per year, based on current prices. But negotiations aimed at allowing soyameal livestock feed to be exported to China have gone cold, while China and the United States enter talks aimed at ending the trade war, he said. "They are not interested in buying soyameal from us right now, but we will keep talking," del Solar said.
He did not say why China had backed away. The Chinese embassy in Buenos Aires did not respond to a request for comment.
China so far has chosen to support its own crushing industry by importing raw beans to be processed in Chinese plants. But trade tensions have all but halted US beans going to China. "If China does not re-establish soyabean imports from the United States, it is possible they will come back to Argentina to talk about importing soyameal," said Gustavo Lopez, head of the local Agritrend consultancy.
Argentina is the world's biggest supplier of both soyameal and soyaoil, which is used in cooking and making biofuels. Washington and Beijing's trade dispute has made Argentine crushing plants uncompetitive against their US counterparts, which are benefiting from a soya glut created by the 25 percent tariff that China has placed on US beans.
Argentine crushing plants have been reduced to working at only 55 percent capacity. Until 2009, Argentina was the biggest supplier of soyaoil to China, with volumes of 3 or 4 million tonnes per year. "China then introduced a new policy to increase its own crushing facilities, so it put up some technical barriers against importing Argentine soyaoil," said Gustavo Idigoras, president of the CIARA-CEC chamber of grains exporter and soya crushing companies. Toward the end of 2015, China halted all Argentine soyaoil imports for two years. The trade started picking up slowly this year.
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