The Observer Network by Nguyen Jaki
Due to the indiscriminate imposition of tariffs by U.S. President Trump, for the first time in nearly 30 years, China importers have not placed orders during the fall U.S. soybean harvest and have instead purchased soybeans from South America. However, compared with China, the world's long-term largest soybean import market, other alternative export markets for U.S. soybeans are insignificant and cannot fill the gap left by the loss of orders from China.
U.S. farmers, related industry organizations and the Trump administration are trying to find alternative markets around the world, including Nigeria, Vietnam and Bangladesh, countries that were not the main buyers of U.S. soybeans, but data and interviews show that these efforts are still unable to compensate for the losses caused by the United States' loss of China, the largest buyer of soybeans, while economic pressure has spread to tractor manufacturers and other agricultural-related companies.
Ted Seifried, chief market strategist at Zaner Ag Hedge, a market research firm in Chicago, pointed out that last year, Chinese purchases accounted for about 45% of total U.S. soybean exports, and the annual demand is usually finalized before early October. About 40% of U.S. soybeans.
However, the latest data from the U.S. government shows that from January to July before the start of the autumn harvest, U.S. soybean exports to China fell by 39% year-on-year to 5.9 million tons; Exports fell even more, by 51%, to $2.5 billion. This has caused American farmers to lose billions of dollars in potential revenue.
During the same period, U.S. soybean exports to Bangladesh increased significantly, slightly exceeding 400,000 tons, but this is only a small part of China's conventional demand. Although exports to Vietnam, Egypt, Thailand and Malaysia rose, total U.S. soybean exports fell 8% from the previous year to 18.9 million tons.
As the largest soybean producer and exporter in the United States, Illinois' soybean industry crisis is particularly prominent.
The University of Illinois estimates that after months of working on sowing, fertilizing and spraying herbicides, the state’s farmers face an average of up to $64 per acre loss this year, in part due to low soybean prices and weak exports.
Ryan Frieders, a 49-year-old farmer who runs a farm in the state of Waterman, has previously pre-sold some of the expected harvest at prices lower than production costs, but most of the remaining soybeans have had to be stored in warehouses.
In February this year, under the auspices of the American Soybean Export Association, Friedes traveled to Turkey and Saudi Arabia with industry officials to meet with local buyers and inspect processing plants.
But there he didn't see a turnaround.
“There’s been talk about pioneering the markets of India, Southeast Asia and North Africa, which are indeed the potential markets of the future, but we haven’t seen a ‘lost market’ that has not yet been excavated and that can suddenly take shape and replace China,” Friedes said.
During the annual event held in August this year, Illinoisly welcomed farmers from Peru, Colombia, Nicaragua, El Salvador, Mexico and Dominica and organized them to visit farms and food processing facilities.
However, U.S. data shows that as of July, the United States has not exported soybeans to Peru and Nigeria this year. Exports to Nicaragua and El Salvador are negligible. Exports to Mexico are basically flat, and exports to Dominica have declined.
Jim Sutter, CEO of the American Soybean Export Association, revealed earlier that he had gone to Japan and Indonesia to explore new markets in order to broaden his customer base. But he also admitted that "the Chinese market is too large, and it is not easy to find a replacement overnight."
In order to appease farmers, in September this year, U.S. Agriculture Secretary Rollins announced on social media that China Taiwan had promised to purchase US$10 billion worth of agricultural products such as U.S. soybeans, corn, wheat and beef in the next four years.
She said the promise would “change the rules of the game,” but the claim was soon criticized and accused of being misleading, a verbal promise that doesn’t equate to a real increase in purchases.
Data from the American Soybean Association shows that in the past five years, China has imported an average of 61% of the global soybean trade supply, more than the rest of the world combined.
As during the last trade war sparked by Trump, China's soybean purchases are now turning to South America.
What made American farmers feel more “sick” was the sudden abolition of soybean export taxes from the Argentine government, which was seen by Trump as a “ally,” while the Trump administration also intended to rescue Argentina’s financial markets.
“This frustration is simply indescribable,” said Caleb Ragland, a 39-year-old Kentucky farmer and chairman of the American Soybean Association.
What’s worse is that the decline in soybean farming revenue has had a chain impact on other sectors in rural areas in the U.S. Global agricultural machinery giant Case New Holland Industrial Group (CNH) said its net sales in agricultural operations fell by 20% over the six months as of June 30.
When attending the "Agricultural Progress Show" event in Decatur, Illinois in August, Gerrit Marx, CEO of the company, said bluntly, "The good news will only come when China actually starts placing orders."
Decatur was once known as the "soybean capital of the world" because of its developed soybean processing industry. Archer Daniels Midland Company (ADM), one of the largest agricultural production, processing and manufacturing companies in the world, has its North American headquarters here.
When asked “Where is the new world soybeans?” at the Agriculture Progress Show, Dickett City Mayor Julie Moore Wolfe answered, “Maybe it’s Brazil.”
On October 2nd, local time, the US media "Wall Street Journal" quoted people familiar with the matter as saying that Trump is considering providing aid of $10 billion or more to American farmers in view of the warning from the US agricultural department that widespread tariff policies will cause negative economic impacts.
The sources said Trump and his team are considering tariff revenue as a primary source of aid funding and that aid funding may begin in the coming months.A senior government official said the discussions were mainly around the scale of aid of $10 billion to $14 billion, which is estimated to be used to help soybean growers and other groups in the agricultural economy.
The official said that negotiations are still ongoing and no final conclusions have been reached. he also stressed that Trump's consideration of the farmers' aid program could change if China and the United States reached a soybean procurement agreement.
On the same day, U.S. Treasury Secretary Bessent also mentioned in the U.S. Consumer News and Business Channel (CNBC) program that the government may announce new support measures aimed at farmers next Tuesday (2th).
In the show, Bessent also hyped that China and the United States would meet during the APEC in late October, and predicted that the next round of China-US trade negotiations would make "significant breakthroughs". he also declared that on this basis, China and the United States could start discussing relevant matters including agricultural procurement.
In response, Chinese Foreign Ministry spokesperson Guo Jiakun responded on September 22nd that heads of state diplomacy plays an irreplaceable strategic leading role in Sino-US relations, and the heads of state of China and the United States have maintained close communication and exchanges.
Guo said: "On the specific issues you mentioned, the two sides are communicating, and I have no information to provide at the moment."
As for whether soybeans will be discussed in Sino-US economic and trade consultations, Guo Jiakun said at a press conference on September 23rd that it is recommended to consult the Chinese competent authorities for specific issues. "I want to emphasize that tariff wars and trade wars are not in the interests of either party. Both sides should negotiate and resolve relevant issues on the basis of equality, respect and reciprocity."
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