China grants one-year US soybean tariff exemption for crushers: sources

The Chinese government has granted new tariff exemptions for US soybean imports for several Chinese crushers with a year-long validity, six different market sources told Agricensus on Thursday.

Several soybean crushers have applied for the tariff exemption for US beans through China Customs online system this week and many have become eligible to book soybean shipments out of the US for the next 12 months.

“Every crusher can apply. And they can buy any shipment during the coming year,” one soybean trader from an international trading house told Agricensus over the phone.

“There is no such thing called quota anymore… [The validity] is within a period of one year,” a second soybean trader from a major trading house said.

Chinese crushers have been given the options to apply for either March or April 2020 as the intended purchase month on China Customs system, based on an image of the system seen by Agricensus.

Once approved, a crusher will be able to book any soybean shipments from the US which load before March and April 2021.

“The [tariff] exemptions can be applied anytime now,” said a third trade source.

However, crushers are required to report their monthly purchases and the approximate purchase price to the government as part of the application process.

“The government hopes to get an idea of annual [import] volume and [monetary] value to estimate how much money would come from the soybean sector so that they can assess whether the phase one deal can be fulfilled,” one soybean trading manager told Agricensus.

China has pledged to purchase a total of $40 billion worth of US agricultural products this year under the phase one agreement, of which a large part is expected to come from the soybean sector.

Meanwhile, the price competitiveness of US soybeans is still a challenge for Chinese crushers as Brazil is a much cheaper alternative, even perhaps for the first month of the US harvest in September.

Based on Agricensus data, CFR China cash premiums for soybeans out of the Pacific Northwest port not be cheaper than those out of Brazil Santos port until October this year after US harvest starts.

Chinese crushers have been aggressively covering short-term demand out of Brazil this week, booking nearly 30 cargoes during the first half of this week already.