Dim Sums: Agricultural Markets in China

Today, China's agriculture ministry told market participants not to worry about 20-to-30-percent increases in soybean meal prices discussed on this blog last week . A lengthy article on the ministry's market information website cited similar increases in soybean meal prices during April, but assured readers that prices will ease after the May 1 Labor Day holiday. The ag ministry did not mention lengthy inspections delaying customs clearance of soybeans that was the focus of feed industry articles cited by this blog last week.  The ministry's article attributed the soybean meal price spike and widespread idling of processing plants to weather problems in Brazil that delayed arrivals of Brazilian soybeans. Lack of Brazilian soybeans disrupted the Chinese market's seasonal switchover from North American to South American supplies that normally happens in April. According to the ministry, soybean crushers' capacity utilization was only 30 percent in the first 2 weeks of...

China's tax revenue and GDP have been going in opposite directions. China's Finance Ministry reported a 3.5-percent decline in tax revenue in the first quarter of 2025 from the same period a year earlier, contrasting with the 5.4-percent growth in GDP reported for the same period.  Sources: China's Ministry of Finance and National Bureau of Statistics. The divergence between tax revenue and GDP follows very similar figures posted for 2024 when tax revenue fell 3.4 percent and GDP reportedly grew 5 percent. Tax revenue once grew more than 20 percent annually when GDP growth was 10 percent or more in 2010 and 2011, but growth has become choppy since 2019. Tax revenue declined in 3 of the last 4 years and grew only 1 percent in 2019. Either GDP statistics do not actually reflect economic activity or China's economy has fallen into a habit of building and making things that fail to generate revenue.  China's total tax revenue grew less than 200 billion yuan between 201...

Chinese soybean meal prices are spiraling upward as customs inspectors closely scrutinize every shipment of imported soybeans. Soaring prices for the important source of protein crimp the operations of animal feed manufacturers and livestock producers in China. China's Feed Industry Information Net reports that the inspection time for soybean cargo ships has grown from the customary 5 days to more than 20 days. Inspections are taking 30 days or more at major ports Tianjin, Qingdao, and Rizhao where ships are lined up waiting to unload cargos. Delays in unloading ships has shrunk the available supply of soybeans for Chinese crushers, in turn reducing the volume of soybean meal available to meet demands from feed mills and livestock producers.  According to the report, tighter inspections were initially spurred by customs inspectors' discoveries of chemical contaminants and pests in shipments of soybeans arriving from Brazil last June. Last year China suspended shipments from 5 ...

China's cutback on imports of U.S. products began in March as prospects of a trade war heated up and China and the United States began assessing tariffs that month. China's customs data for March indicate that China's imports of several U.S. agricultural products were down from year-earlier amounts. China's modest overall appetite for imported farm commodities made it easier for China to cut back.  China's imports of U.S. agricultural products totaled $1.88 billion in March 2025, down $801 million from a year earlier. China's imports of all other U.S. products totaled $10.6 billion, down $502 million year-over-year. In this chart, "agricultural" includes HS chapters 1-24, 41, 52, and 53. Calculated from China customs administration data. A few specific commodities accounted for nearly all of the year-on-year decline in China's imports of U.S. agricultural products. Cotton imports were down $292 million, sorghum imports were down $147 million, and s...

China's agricultural GDP grew 3.5 percent from a year earlier in the first quarter of 2025, slower than the 5.4 percent growth in overall GDP according to the latest figures from China's National Bureau of Statistics. Income earned by rural businesses (predominantly farms) grew 4.7 percent. These numbers seem inflated since physical output of farm goods grew at less than the GDP growth rate and farm prices were down. Livestock output was up moderately from a year ago while prices crashed, indicating weak demand.  The impact of consumer subsidies on the economy was narrowly focused on electronic gadgets. Production of electronic vehicles boomed, but industrial prices were down, consumer prices were mostly flat, China's exports were up and imports were down. Farm prices in China were down 4.2 percent from a year earlier, according to the index of prices received by agricultural producers. A sharp drop in the price of corn--the largest component of animal feed--is consistent w...

Tariffs on U.S. imports are impacting prices for certain types of meat and animal feed. Reports posted on China's Feed Industry Information net note that supplies of soybeans and soybean meal are tight . The latest customs data show soybean imports for March 2025 were only 3.5 million metric tons (down 7.9 percent from a year earlier), said to be the lowest monthly volume in years. Buyers have already cut back sharply on purchases of U.S. soybeans while deliveries of Brazilian soybeans have been delayed by slow Chinese customs inspections. Soybean crush volume fell to 980,000 metric tons last week. The decline in soybeans processed constricts the supply of soybean meal available for use in animal feed. Soybean meal prices in northern China are reported on April 14 to be in the range of RMB 3,680-to-3,730 per metric ton, up RMB 200-to-230. The price in Guangdong previously quoted at RMB 3000-to-3040 per metric ton also rose RMB 200 as many northern buyers made purchases in Guangdong...

China's leaders are probably furious that they are targets of U.S. tariffs because they view themselves as the proponents of a new improved version of globalization in the 21st century. The deep divide on China's role in global trade is one of the big challenges to resolving the current trade war. At a meeting on agricultural trade policy in Beijing last November a Chinese agricultural official recited China's support for globalization, its practice of free trade, its adherence to WTO rules, and China's role as a driving force for global agricultural development and trade. The official went on to proclaim that China is ready to address "severe challenges" to global agriculture and food security by improving resilience of global supply chains on the basis of food security, constructing a more sustainable, resilient, fair and inclusive global agricultural trade system, and by strengthening dialogue and consultation to stimulate new momentum in agricultural trad...

China's ban on 5 U.S. agricultural exporters contrasts with its lenient approach to domestic product safety and to suppliers in favored countries. This highlights China's cynical use of plant and animal quarantine and food safety inspections as a tool to control the flow of imports and to "diversify" import sources.  On April 4 China's customs administration suspended 4 U.S. suppliers of sorghum and meat and bone meal and 2 suppliers of poultry products  (one company appears to be on both lists): Chinese customs said they detected levels of zearalenone--a mycotoxin produced by certain types of mold--in the sorghum supplier's shipments.  Chinese customs said they detected salmonella in shipments by 3 companies of meat and bone meal to be used in animal feed.  Chinese customs said they detected furazolidinone, a drug banned in China, in three batches of chicken products supplied by 2 U.S. poultry producers. A Customs administrator cited Chinese laws and regulat...

Chinese news media say the country is confident it can cope with reduced supplies of U.S. farm goods as China raises tariffs on U.S. agricultural products. China's trade war tariffs on U.S. products are approaching 100% after China announced an 84% tariff on U.S. goods today to counter President Trump's announcement of 125% tariffs on Chinese goods.  China's "party line" is that U.S. farmers will be hurt more than China by the tariff war because China has diversified its import sources, increased domestic production, and reduced use of soybean meal in animal feed. Weak consumer demand in China and deflationary pressures also reduce China's vulnerability to tariffs on farm product imports...at the same time these factors pose the gravest threat to China's economy sliding over the edge if its exporters of consumer and industrial products lose U.S. markets in the trade war. An April 9 article, " China strengthened self-sufficiency in agricultural product...

  China's Peoples Daily warned that a trade war could destroy the foundation of China-U.S. agricultural cooperation. An April 2 opinion piece praised the mutual complementarities in agricultural trade between the two countries, pointing out that U.S. agricultural products fulfill demands in the China market while also driving industry development and farm income growth in the United States.  The article blames the U.S. for impacts on U.S. farmers expected to result from China's imposition of  tariffs that specifically target U.S. agricultural products in retaliation for U.S. tariffs on Chinese products. On its face, the article seems to be aimed at the Trump administration, but it seems unlikely that Trump administration officials will read a Chinese language article in a publication whose readership is primarily communist party officials. Chinese officials have already decided to impose tariffs aimed at farm products, so who is this article trying to convince?  T...