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ECONOMY | 10-09-2019 22:01

China turns to Argentine soy meal in fresh blow to US farmers

Asian giant is finally allow in soy meal imports from Argentina after two decades of fruitless talks, Agriculture Ministry announces.

China is opening the door to soybean meal shipments from Argentina, the world’s biggest exporter of the animal feed, as Beijing looks to pivot away from US agricultural products amid a trade war with Washington.

The Asian giant is finally allowing soy meal imports from the South American nation after two decades of talks, Argentina’s Agriculture Ministry said in an emailed statement Tuesday.

President Mauricio Macri hailed the agreement as "historic" in a post on Twitter, describing China as "the world's largest consumer of vegetable protein for livestock feed."

"It is key news for the agricultural sector," the president added. "Our country is the largest exporter of soybean meal and now one of the largest markets in the world opens up to us. This means more labour, more work in agribusiness and more opportunities for Argentines."

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.

Firstly, as China shunned US beans, it turned to Brazil – and to a lesser extent Argentina – for supplies. Now it’s going one step further, accepting value-added meal from Argentina even though the move could risk angering its crushers.

It remains to be seen whether China will actually import Argentine meal. The countries still need to jump through bureaucratic hoops before cargoes can set sail, according to Gustavo Idigoras, head of crop export and crushing chamber Ciara-Cec. They include China giving final approval to Argentina’s crushing plants, which should happen next month, and inclusion of meal on China’s customs register, which could take five months, Idigoras said.

In August, a Chinese delegation visited crushing plants on the Paraná River run by Bunge Ltd, Louis Dreyfus Co, Cargill Inc, Aceitera General Deheza SA, Molinos Rio de la Plata SA, Cofco Corp and Renova, which is a joint venture between Glencore Plc and Vicentin SAIC.

Being able to export to China would be a boost for Argentina’s crushers. Profit margins have been falling and idle capacity has increased to more than 50 percent.

The announcement comes at a time when China is expanding its footprint in Latin America by developing infrastructure projects across Argentina, from hydroelectric plants to railways.

– TIMES/BLOOMBERG

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