In a significant blow to U.S. soybean farmers, China, their largest buyer, has ceased purchasing their crops, leaving them with a surplus, and choosing instead to source from Brazil.
Soybean Exports Falter As China Chooses Brazil
U.S. farmers are bracing themselves for the upcoming harvest of millions of tons of soybeans. However, China, once a major buyer of U.S. agricultural products, has not made any U.S. soybean purchases this year, opting instead for a Brazilian supplier, reported The Wall Street Journal.
Jim Sutter, CEO of the U.S. Soybean Export Council, pointed out that at this time last year, American soy farmers had already finalized substantial sales to Chinese buyers. As the world’s largest importer of soy, China purchased nearly $13 billion worth of U.S. soybeans in the past year.
China’s shift from U.S. soybeans is perceived as a strategic move in the ongoing trade war with the U.S. The fallout is severely impacting U.S. farmers, with crop prices dropping and many farmers expected to lose approximately $100 per acre this year, based on federal data. They are also struggling to find alternative buyers for such a large quantity.
Industry groups are now pressing the Trump administration to offer financial aid to farmers facing hardship. "Unless something miraculous happens, I'm not going to plan on China taking our soybeans," a soybean farmer told the publication.
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Soy Farmers Look For Alternatives As Trump Pushes China To Fix Trade Deficit
The shift in China’s soybean sourcing has been a long time coming. In August, U.S. soybean farmers had warned President Trump of the dire economic consequences if the U.S. crop continued to be shunned in favor of Brazilian soybeans. The American Soybean Association had urged Trump to secure a trade deal with China that included substantial soybean purchase commitments.
However, this shift in demand may not be easily reversible. In a separate report, Trump had called on China to quadruple its soybean orders from the U.S. to address its soybean shortage and potentially reduce the trade deficit. Despite this, experts had deemed it “highly unlikely” that China would comply with this request.
China contends that U.S. farmers are simply collateral damage resulting from the government’s aggressive trade policies.
Meanwhile, American soy farmers are bracing for a future without China as a key buyer. They are reducing spending on machinery and fertilizer, urging lawmakers to help find new export markets, promote more soybean oil in diesel, and support domestic uses like soybean-based asphalt for road paving.
Price Action: On a year-to-date basis, Teucrium Soybean Fund ETF (NYSE:SOYB) climbed 2.69%, while Invesco DB Agriculture Fund (NYSE:DBA) rose 2.97%, as per data from Benzinga Pro.
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