In a typical year, China buys 25% to 30% of the U.S. soybean crop, but this is not a typical year.
Embroiled in a trade war with the United States, China hasn’t purchased a single bushel of this year’s harvest, according to Kirk Merritt, executive director of the Ohio Soybean Association, and that has farmers across the state anxiously wondering when things might change.
IN MOST years, China would have already pre-booked billions of dollars in soybean orders from the United States, Merritt said.
“I think it’s an effort on their part to not buy our beans as part of the negotiation process,” Merritt said. “I think they’ve probably stated that.”
It doesn’t help that China — in response to Trump imposing trade tariffs on China — slapped a 35% retaliatory tariff on imports of U.S. soybeans, making them less competitive in price with other major producers, including Brazil and Argentina.
“They have not prohibited buyers from buying our beans,” he said, “they have just made it too expensive, essentially.”
What really galls farmers is that Argentina temporarily waived certain taxes on its soybean exports, making them more attractive to Chinese buyers, just before President Donald Trump decided the U.S. government would provide Argentina with a $20 billion financial aid package.
“It’s hard for soybean farmers to swallow that just a day after Argentina maneuvered to supplant our market share in China, the Trump Administration announced it will send taxpayer money to Argentina to prop up its failing economy,” Ohio Soybean Association President Rusty Goebel said recently in a written statement.
CHINA’S DECISION to not buy U.S. soybeans could be an unwillingness to assume the cost of the retaliatory tariff, said Seungki Lee, an agricultural economics professor at Ohio State University, or an attempt to get the United States to soften its trade-related demands.
But China could eventually be forced to buy more soybeans from the United States if Brazil and Argentina experience problems with their harvests, which occur between January and June in South America, Lee said.
SOYBEAN FARMERS are not only dealing with a drop in demand related to China and “geopolitical issues,” said Eric Richer, associate professor of farm management at Ohio State University Extension, but also lower crop yields due to the late summer drought.
“The most active farmers I think are talking with their elected officials about improving export demand in whatever way they can,” Richer said.
At the same time, some are considering whether they should store their soybeans in hopes that they can get a better price in the new year.
“But that has a big if attached to it,” Richer said. Farmers have to find a place to store their soybeans, he said, and some may be forced to sell if they need cash to pay debts.
“Every farm has its unique situation,” Richer said.
CHINA LOOKED to Brazil for more soybeans during trade tensions with the United States under Trump’s first administration, Merritt said, but then returned to its usual buying pattern. But, he said, China has been looking to become less dependent on the United States soybeans in general.
