By Naveen Thukral
Singapore (Reuters) – Asian buyers are reducing their purchases of U.S. agricultural goods as Washington plans to charge fees for Chinese-linked vessels and key import tariffs on key regional trading partners Stoke uncertainty and a decline in appetite for U.S. products.
China's 34% responsibility for U.S. goods is the largest importer of U.S. agricultural products, but other Asian countries, including Japan, South Korea and Thailand, have also purchased large quantities of U.S. wheat, corn and soy meals.
President Donald Trump's plan to restore U.S. shipbuilding with up to $1.5 million on ships linked to China forced exporters to search for non-Chinese vessels, and then pushed freight costs and cut demand for U.S. agricultural commodities.
“This makes the United States now an attractive destination for more than half of the world's fleet,” said Jay O'Neil, a freight consultant in Kansas.
He said ship owners and operators are reluctant to offer quotes for U.S. ports in April, May and June due to imminent fees.
Transportation challenges and trade war uncertainty could weigh benchmarks on Chicago soy and wheat futures that approached multiple-month lows, traders said. [GRA/]
“As of now, most importers are not risking importing from the United States,” said a Singapore trader at an international company. “The cost of transportation is rising and there is a lot of uncertainty in the trade war.”
U.S. tariffs on dozens of countries took effect on Wednesday, including 104% tariffs on Chinese goods, even as the president prepares to negotiate with certain countries.
Scarce Transport
Asia buys about 35% of wheat and corn worldwide. For soybeans, China accounts for more than 60% of global trade.
Traders say that while other Asian importers are not expected to retaliate against U.S. tariffs, limited ship availability and uncertainty in the trade war are hurting purchases.
“We are trying to exchange for the goods we booked earlier to provide us with wheat to Southeast Asia. We have to pay higher freight to take non-Chinese ships. So now it's a big no for us grains.”
Traditional American wheat buyers such as Japan and South Korea are expected to continue buying American goods, but they may buy some corn and soy from alternative suppliers in South America and the Black Sea.
“As of now, buying American products has actually stopped. But looking forward, we hope that Japan and South Korea continue to bring us to the United States because they are committed to buying from the United States.”
