【By Guan察者网, Yuan Jiaqi】
Due to President Trump's excessive tariffs, Chinese importers have not placed orders for U.S. soybeans during the autumn harvest season for the first time in nearly 30 years, instead turning to South America for soybean purchases. However, compared to China, the world's long-term largest soybean importer, the scale of other alternative export markets for U.S. soybeans is negligible and cannot fill the gap left by the loss of Chinese orders.
According to Reuters on the 3rd, desperate U.S. farmers, industry organizations, and the Trump administration are trying to find alternative markets around the world, including countries such as Nigeria, Vietnam, and Bangladesh, which were not traditional buyers of U.S. soybeans. However, data and interviews show that these efforts still cannot compensate for the losses caused by the loss of China, the largest buyer of U.S. soybeans. At the same time, economic pressure has spread to tractor manufacturers and other agricultural-related enterprises.
Ted Seifried, Chief Market Strategist at Zaner Ag Hedge, a Chicago-based market research company, pointed out that last year, China accounted for about 45% of U.S. soybean exports, and usually finalized about 40% of its annual requirements for U.S. soybeans by early October.
However, according to the latest data from the U.S. government, U.S. soybean exports to China fell by 39% to 5.9 million tons in the first seven months of the year, before the harvest season; the decline in export value was even greater, reaching 51%, dropping to $2.5 billion. This led to billions of dollars in potential revenue lost for U.S. farmers.
At the same time, U.S. soybean exports to Bangladesh increased significantly, exceeding 400,000 tons, but this is only a small fraction of China's regular demand. Although exports to Vietnam, Egypt, Thailand, and Malaysia have increased, total U.S. soybean exports still declined by 8% to 18.9 million tons compared to the previous year.
As the largest state for soybean production and export in the United States, Illinois is facing a particularly severe crisis in its soybean industry.
According to estimates from the University of Illinois, after months of planting, fertilizing, and spraying herbicides, farmers in the state face an average loss of up to $64 per acre, partly due to low soybean prices and weak exports.
Ryan Frieders, a 49-year-old farmer running a farm in Watman, Illinois, had previously sold part of his expected harvest at prices below the cost of production, but most of the remaining soybeans had to be stored in silos.
In February, Frieders joined industry officials on a trip to Turkey and Saudi Arabia sponsored by the U.S. Soybean Export Association to meet local buyers and inspect processing plants.
But there, he saw no breakthroughs.
"People talk about opening up markets in India, Southeast Asia, and North Africa, which are indeed potential markets for the future, but we haven't seen a yet-untapped market that can suddenly take over from China," said Frieders.
The New York Times illustration
It was reported that at the annual event held in August, Illinois welcomed agricultural buyers from Peru, Colombia, Nicaragua, El Salvador, Mexico, and the Dominican Republic, organizing them to visit farms and grain handling facilities.
However, data from the U.S. showed that as of July, the U.S. had not exported any soybeans to Peru or Nigeria this year, and exports to Nicaragua and El Salvador were minimal, while exports to Mexico remained roughly the same, and exports to the Dominican Republic decreased.
Jim Sutter, CEO of the U.S. Soybean Export Council, earlier revealed that in order to expand the customer base, he had gone to Japan and Indonesia to explore new markets. But he also admitted, "The Chinese market is too big to find a replacement overnight."
To calm farmers' emotions, in September, U.S. Agriculture Secretary Sonny Perdue claimed on social media that Taiwan had promised to purchase $10 billion worth of U.S. agricultural products, including soybeans, corn, wheat, and beef, over the next four years.
She called this promise a "game-changer," but this statement quickly faced criticism, being accused of being misleading, as such verbal promises do not equate to actual increases in procurement.
Data from the U.S. Soybean Association shows that in the past five years, China has imported an average of 61% of global soybean trade supply, more than the total of all other regions combined.
Just like during the previous trade war triggered by Trump, China's soybean procurement has now shifted to South America.
What further disappoints U.S. farmers is that the Argentine government, seen by Trump as an "ally," suddenly abolished the soybean export tax to seize the market, while the Trump administration is also considering intervention to assist the Argentine financial market.
"This sense of betrayal is simply indescribable," said Caleb Ragland, 39, a farmer from Kentucky and chairman of the American Soybean Association, with great sadness.
Compounding the problem, the decline in soybean income has already had a chain reaction on other areas of rural America. Global agricultural machinery giant CNH Industrial said that in the six months ending June 30, its agricultural business net sales fell by 20%.
During the "Agricultural Progress Show" in Decatur, Illinois in August, the CEO of the company, Gerrit Marx, spoke frankly, "Good news will only come when China truly places orders."
Decatur, once known as the "Capital of the World's Soybeans" because of its developed soybean processing industry, is home to the North American headquarters of Archer Daniels Midland (ADM), one of the world's largest agricultural production, processing, and manufacturing companies.
At the Agricultural Progress Show, when asked where the "new capital of the world's soybeans" might be, Mayor Julie Moore Wolfe of Decatur lowered her voice and replied, "It may be Brazil."
On October 2nd local time, U.S. media The Wall Street Journal cited sources who said that due to warnings from the U.S. agriculture sector about the negative economic impact of broad tariff policies, Trump is considering providing $1 billion or higher aid to U.S. farmers.
These sources said that Trump and his team are considering using tariff revenues as the main source of funding for the aid, and the funds could begin to be distributed within the coming months. A senior government official also said that discussions mainly revolve around an aid package of $10 billion to $14 billion, which is likely to be used to support soybean growers and other groups in the agricultural economy.
The official stated that the related discussions are still ongoing and no final decision has been made yet. He also emphasized that if a soybean procurement agreement is reached between China and the U.S., Trump's considerations regarding the farmer assistance plan could change.
On the same day, U.S. Treasury Secretary Janet Yellen mentioned on the CNBC program "Consumer News & Business Channel" that the government may announce new support measures for farmers on Tuesday (the 2nd). However, the official said that this schedule may be delayed, and a government shutdown could complicate the implementation of the plan.
On the show, Yellen also hinted at the possibility of a meeting between China and the U.S. during APEC in late October, and predicted that the next round of trade negotiations between the two countries would achieve "significant progress." She also claimed that based on this, China and the U.S. could start discussing matters including agricultural product procurement.
Regarding this, Foreign Ministry spokesperson Guo Jia Kun responded on September 22, stating that the leadership diplomacy plays an irreplaceable strategic guiding role in Sino-U.S. relations, and the leaders of the two countries maintain close communication and exchanges.
Guo Jia Kun said, "Regarding the specific issues you mentioned, both sides are currently communicating. I don't have any information to provide at this moment."
As for whether the Sino-U.S. economic and trade consultations will discuss soybeans, Guo Jia Kun said at a press conference on September 23 that specific issues should be addressed by the relevant Chinese authorities. "I want to emphasize that a tariff war or trade war does not benefit either side. Both sides should resolve the issues through negotiations on the basis of equality, respect, and mutual benefit."
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