China: Diversion of US agricultural products turns market upside down
Chinese importers say that, as the Sino-US trade war intensifies, the cost price of US agricultural…Chinese importers say that, as the Sino-US trade war intensifies, the cost price of US agricultural products suddenly increased. This is on the one hand because customs tariffs increased, and on the other hand because customs procedures take longer, which means that a larger proportion of agricultural products goes bad while waiting to be released from customs. This inevitably reduces the profit margin.
As for exporters of US agricultural products, they attempt to avoid the increased Chinese customs tariffs by diverting their products to Hong Kong. Fruit import in Hong Kong is rapidly increasing and imported fruit becomes cheaper. This development is most obvious in the price of imported US cherries. They are close to 40% cheaper than in the same period in previous years. Some traders say that the higher cost price will eventually lead to higher prices, but for now it has resulted in the opposite.
Every summer in China, many kinds of fruit compete with each other in the market. The position of imported fruit is not that strong when it comes to volume and price. Especially this year as many Chinese farmers enjoyed an abundant harvest. The increased production volume gave consumers more room to choose. This is just another blow to the market position of imported fruit from the US.
One Chinese fruit importer spoke: "I think that the increased cost price is only one aspect of current market conditions. If the cost price is high, but the retail price is also high, then there is not much change in profit margin. At the moment, only the US and Canada are in the middle of cherry production season. Some Chinese importers are hesitant. They want to see how this situation develops. Others continue to import cherries. Yet others have already shifted their attention to Hong Kong."