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SINGAPORE (Reuters) – Asian importers are scaling back their acquisitions of U.S. agricultural products in light of new fees imposed on vessels associated with China and significant import tariffs affecting major regional trade partners. This situation has created an atmosphere of uncertainty that is affecting demand for American agricultural goods.
China, the leading importer of U.S. agricultural exports, has imposed retaliatory tariffs of 34% on American goods. However, other Asian nations, including Japan, South Korea, and Thailand, are also important markets for U.S. commodities such as wheat, corn, and soybean meal.
The initiative by President Donald Trump to bolster U.S. shipbuilding through the introduction of port fees—up to $1.5 million on vessels connected to China—has compelled exporters to seek alternatives, raising freight costs and subsequently lowering interest in U.S. agricultural exports.
“The U.S. is increasingly seen as an unappealing option for more than half the global shipping fleet,” stated Jay O’Neil, a freight consultant based in Kansas.
Due to the impending fees, many vessel owners and operators are hesitant to provide shipping quotes for U.S. ports for the upcoming months, according to O’Neil.
The ongoing shipping complications and uncertainties related to the trade conflict are expected to exert pressure on benchmark Chicago soybean and wheat futures, which are presently nearing their lowest levels in several months, traders have indicated.
“Currently, most importers are unwilling to take the risk of sourcing from the U.S.,” remarked a Singapore-based trader from a firm that exports American grains and oilseeds to Asia. “With rising shipping costs and rampant uncertainty regarding the trade situation, it’s not an appealing prospect.”
NEW TARIFFS IMPLEMENTED
New U.S. tariffs on an array of countries took effect on Wednesday, alongside steep tariffs—up to 104%—on Chinese products, even as the President gears up for discussions with several nations.
LIMITED SHIPPING OPTIONS
Asian nations account for approximately 35% of the global wheat and corn market. In the case of soybeans, China claims over 60% of the global trade in this oilseed.
Although other Asian importers are not expected to respond with their own tariffs against U.S. goods, the scarcity of available vessels and the prevailing trade war-related uncertainties are impacting purchase decisions, according to traders.
“We’re attempting to replace vessels for orders we had previously secured to deliver U.S. wheat to Southeast Asia. The cost of freight has increased for us to secure non-Chinese ships—so for now, importing U.S. grains is off the table,” a second Singapore trader noted.
Traditional buyers of U.S. wheat, such as Japan and South Korea, are likely to continue sourcing American wheat. However, they may also seek alternatives for corn and soybeans from suppliers in South America and the Black Sea region.
“At the moment, purchasing U.S. products has essentially halted. However, moving forward, we expect Japan and South Korea to maintain their U.S. wheat imports as they are committed to sourcing from the U.S.,” the second trader explained.
For countries like Japan and South Korea, shifting away from U.S. wheat can be challenging because it is primarily used for direct human consumption. However, they can consider alternatives for feed grains such as corn and soybeans.
Many grain importers in Southeast Asia have not yet secured about half of their requirements for May, leaving them exposed to potential supply deficiencies.
Mike Steenhoek, executive director of the Soy Transportation Coalition in the U.S., reported that a major American exporter failed to receive any bids from maritime shipping companies to transport soymeal due to the proposed fees on China-related vessels.
“The impacts are already becoming evident,” Steenhoek added.
Source
finance.yahoo.com