American soybean producers struggling with a massive oversupply problem are unlikely to see relief any time soon, according to U.S. Department of Agriculture’s chief economist: in 2019, close to 25 million tonnes of the crop will go unsold.
Robert Johansson said those unsold soybeans are a direct consequence of President Donald Trump’s trade war with China, Business Insider reported on Friday.
Johansson said U.S. exports to China dropped by 13.5 million tonnes for the 2019 crop year and stockpiles of soybeans have grown dramatically over the past two years. He predicts “that unsold soybean stocks will more than double to 24.8 million tonnes in 2019.”
In a speech at the USDA’s annual forum in Arlington, Virginia on Thursday, the economist said the effects of Trump’s trade war — which cost American soybean producers $7.9 billion last year — will continue well past any agreement that might be reached between Washington and Beijing, even if that agreement comes sooner than later.
"The record-high stocks in the US due to the trade situation will take several years to unwind, which will weigh on US prices going forward even with potential China purchase agreements," Johansson said.
Prior to Trump’s trade row with China, the country was America’s largest buyer of soybeans; now, China has dropped to fifth, according to the USDA.
Alfred Evans, founder and CEO of Islan Investments, agreed that the impact of the trade dispute will be felt long after tariffs are removed, telling Business Insider: "Trump's tariffs might be a time limited event but the change in trading patterns they prompted for China may persist long after the trade war is over.”