10.05.2018 (Financial Times) - Wilmar International, the agricultural commodity trader controlled by Malaysia’s Kouk family, has warned a tit-for-tat trade war between China and US could impact the performance of its oilseeds business, one of the largest in the industry.

“The prospect of China imposing import tariffs on US soyabeans will result in soyabean prices staying volatile for the coming quarters,” said Wilmar chairman and chief executive Kuok Khoon Hong. “Even though performance of our Oilseed Crushing business will not be affected in the short term, a prolonged stand-off between China and the US would affect the utilisation of our crushing plants.”

China is the largest buyer of soyabeans in the world and needs US imports to satisfy demand.

However, Beijing is threatening to impose duties of 25 per cent on US soyabeans if President Donald Trump follows through with threats to impose tariffs on certain Chinese goods. Soyabeans are key feed for livestock.

Wilmar could be one of the companies hardest hit if trade tensions between Washington and Beijing do escalate and it is forced to source supplies from elsewhere. It has more than 50 crushing plants in China as well a number of joint ventures.

According to rival traders, Chinese buyers have already halted purchases of the coming US soyabean crop due to concern they could be hit with a $100 per tonne tax shipments.

Mr Kuok’s comments came after Wilmar reported a 41 per cent decline first quarter net profit to $203m, which it blamed on a “difficult operating environment” for its tropical oils business and seasonal losses in sugar.

The oil unit recorded a pre-tax profit of $101.7m in the three months to March, down from $155.2m a year, because of lower palm oil prices and poor margins in its consumer-facing businesses. Wilmar owns Arawana, the biggest Chinese edible oil brand.

Mr Kuok said any negative impact on its oilseeds business from the China/US trade tensions would be mitigated by better performances from both its flour and rice businesses.

“In addition, with the improvements in production yields and better margins from downstream operations, Tropical Oils segment will probably perform better in the subsequent quarters,” he added.

Shares in Wilmar fell 1.2 per cent to S$3.2, giving the company a market value of just $15bn.