China allows the import of soymeal livestock feed from Argentina for the first time under a deal announced by Buenos Aires, an agreement that linked the world’s top exporter of the feed with the top global consumer. The pact was signed by Argentine and Chinese officials in Buenos Aires on 11th September. Beijing has been loathe to accept Argentine meal because it prefers to import raw soybeans and process them in China to promote its own crushing industry. But the trade war has been turning global supply chains on their head.
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. Being able to export to China is a big boost for Argentine crushers whose margins have been falling, with idle capacity increasing to more than 50%. Crushers in Argentina are expected to ship meal to chicken farms, easing concerns about falling demand from the nation’s huge pig herd, which is shrinking because of African swine fever, according to Argentina’s crop export and crushing chamber Ciara-Cec.
Argentine President Mauricio Macri, 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. “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. Argentina and China still need to jump through bureaucratic hoops before cargoes of soy meal can set sail. Final approval of sanitary rules and Argentina’s crushing plants should happen in October, Ricardo Negri, head of Argentina’s agricultural sanitary agency, Senasa, said. Inclusion of meal on China’s customs register is expected before the end of the year, paving the way for shipments in the first months of 2020, Negri said.
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.