Soybeans face long-term decline

Trump trade war pushes China to buy from Brazil, Argentina

 A soybean farm near Seymour outside Champaign. (Flickr/Kevin Dooley)

A soybean farm near Seymour outside Champaign. (Flickr/Kevin Dooley)

By Ted Cox

Illinois soybean farmers could face a lasting decline in Chinese exports brought on by President Trump’s trade war, according to a new study published this week by experts at the University of Illinois.

According to the article, published Wednesday, China is already shifting imports from the United States to Argentina and Brazil, with Brazil in particular increasing its soybean acreage over the last few years to almost rival the United States.

U.S. soybean farmers saw prices drop earlier this year after Trump imposed tariffs on $50 billion in Chinese goods and China responded in kind, concentrating on agriculture. Trump recently announced additional tariffs on $200 billion in Chinese goods.

Even before Trump ratcheted up his trade war, the Illinois Farm Bureau projected this summer that Illinois soybean farmers could absorb a $420 million loss.

This week’s article, posted on Farmweeknow.com, suggested the impact could extend into next year and beyond, with a lasting impact on global trade patterns.

According to the study, produced by University of Illinois Department of Agriculture and Consumer Economics faculty members Jonathan Coppess and Kathy Baylis, along with graduate student Yujun Zhou and data specialist Qianting Xie: “Agricultural markets have seen rapid drops in corn, sorghum and soybean prices. … Of particular concern, however, is the long-run effect on U.S. agricultural exports, especially soybeans.”

The article cites how U.S. soybean prices slipped to the lowest point in nine years this summer, at $7.84 a bushel. While prices have rebounded more recently to $8.38 a bushel, Chinese imports have shifted to Brazil, pushing its soybean price up to $10.50 a bushel.

Despite the lower U.S. price, due to the impact of Trump’s trade war and retaliatory tariffs the Chinese are increasingly importing soybeans from Brazil. Last year, Brazil exported 53.8 million tons of soybeans to China — about three-quarters of its entire crop — but this year that’s expected to climb to 66 million tons.

“With Brazil exporting more of its soybeans to China, the European Union, Japan, Mexico and countries in Southeast Asia will likely focus their attention on buying from the U.S. instead — but at a discount,” the article stated. Such trends can be lasting and hard to reverse.

Earlier this month, Illinois Professor Gary Schnitkey said farmers were being pinched between falling prices and higher costs for fertilizer and fuel.

Corn projects a better return than soybeans next year, and Schnitkey expects farmers to shift some of their acreage,” according to the Farmweeknow.com article.

Schnitkey advised all farmers to tighten their belts, saying, “We would suggest making only very necessary investments and conserve every cash flow that we can.”