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China opens soymeal market to No. 1 exporter Argentina in 'historic' deal

CommoditiesSep 10, 2019 05:28PM ET
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© Reuters. FILE PHOTO: FILE PHOTO: Farmer Giustocio looks at soy plants

By Hugh Bronstein and Maximilian Heath

BUENOS AIRES (Reuters) - China will allow the import of soymeal livestock feed from Argentina for the first time under a deal announced by Buenos Aires on Tuesday, an agreement that will link the world's top exporter of the feed with the top global consumer.

The pact will be signed by Argentine and Chinese officials in Buenos Aires on Wednesday, Argentina's agriculture ministry said in a statement. Last month Chinese officials inspected Argentine soymeal factories in the run-up to signing the pact.

Argentina had tried for years to break into the Chinese market, the biggest consumer of the meal it uses to feed its massive hog herd. China, with its own crushing industry to protect, had steadfastly resisted.

The U.S.-China trade war, however, strengthened Argentina's hand, prompting China to expand its soymeal import options, market sources say.

"This is a historic agreement," Gustavo Idigoras, president of Argentina's CIARA-CEC chamber of grains exporting companies told Reuters, though he added the deal still required a two-step process of plant authorizations and then registrations that could take several more months.

"Shipments aren't expected to start immediately."

The meal manufactured in the giant crushing plants that dot the banks of Argentina's Parana River, clustered around the country's main grains hub of Rosario, is exported mostly to Southeast Asia, Europe and Northern Africa. China imports only small amounts of soymeal currently, none of it from Argentina.

Argentina, the top global exporter of processed soy, expects to export a total of 26 million tonnes of soymeal this year globally, and 8.5 million tonnes of raw beans.

"It is excellent and timely news. Argentina needs to add more value to its exports to China and the world," said Luis Zubizarreta, president of Argentina's ACSOJA soy industry organization that represents farmers, exporters and seed firms.

The pact provided a welcome respite from the bad news that has hammered Argentina's economy in recent months. The country is in recession and inflation is expected at 55% this year.

Business-friendly President Mauricio Macri, who is facing an uphill fight for a second term in an Oct. 27 election, said the agreement would bolster jobs in the agricultural sector and create more opportunities for Argentine farmers.

"Our country is the top exporter of soybean meal and now one of the largest markets in the world has been opened," he said.

China opens soymeal market to No. 1 exporter Argentina in 'historic' deal
 

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Comments (6)
Zoltan McVeigh
Zoltan McVeigh Sep 11, 2019 8:49AM ET
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Diversification is part of any good long-term business plan.
Zoltan McVeigh
Zoltan McVeigh Sep 10, 2019 10:24PM ET
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The soybeans will eventually go somewhere else. Argentina's soybeans were being purchased by someone before. Someone will have to fill the void. This trade war is only diversifying supply chains.
Steven Chen
Gamer_LG Sep 10, 2019 8:57PM ET
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trade war has a lot of winners but surely neither us or China. winners are those filling the orders for both countries. losers are the countries lost each other's business.
Me comment
Me comment Sep 10, 2019 8:25PM ET
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Trump tariff are good for other countries to step in and secure big trade deals with China for products the US (Trump) has tariffed. Why would China yield to US pressure when they can replace anything they get from the US with deals with other countries at the same or cheaper pre tariff prices. Trump's bad economics will haunt the US producers for years and China will be in no hurry to agree to anything. Problem is Trump win't admit to it his ego won't let him.
Michael Angelo
Michael Angelo Sep 10, 2019 7:08PM ET
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This is the cost of war. Something the genius didn't even thought. Now probably is time to call a fixer like in his private life.
Al Vlaj
alvlaj Sep 10, 2019 5:22PM ET
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These types of moves will be lost business for our farmers forever. Even if the trade war ends soon, that will be lost business that wont come back. Trump’s stubborness is handing right to our country’s competitors.
Erski Gumby
SB20 Sep 10, 2019 5:22PM ET
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I thought democrats are pro globalization?
Howie Zoukl
Howie Zoukl Sep 10, 2019 5:22PM ET
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wow the USA had the majority of market share to China ... now it is all gone to Argentina.. I feel bad for the US soybean farmers
Brian Brick
Brian Brick Sep 10, 2019 5:22PM ET
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Argentina market is collapsing. Regardless of the trade war this is a cheap alternative that would have happened regardless
Steven Chen
Gamer_LG Sep 10, 2019 5:22PM ET
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don't feel bad for us farmers, they getting paid without work, sweet deals from trump.
 
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