The U.S. Soybean Market Won't Recover From Trade War Until 2024
According to CNN, American soybean farmers could have an even worse year in 2019 than they had in 2018, due to President Donald Trump’s trade war. In December, the number of soybeans in storage hit a record 3.7 billion bushels. That’s 80% of last year’s total harvest.
Although China has promised to resume buying from the U.S., there could still be 900 million bushels for soybeans in storage at the end of harvest.
The Trump Administration has softened the blow for farmers by giving $12 billion in aid to farmers hurt by tariffs. More, some of the demand for U.S. soybeans has shifted to other countries.
"So far, farmers don't feel the pinch directly. But if this lingers on, and we still have billions of bushels in extra supply, this could become more of a 2019 story," said Grant Kimberley, a soybean and corn farmer and director of market development at the Iowa Soybean Association.
Still, China was formerly the largest export market for American soybeans.
Beijing pledged in both December and February to resume buying American soybeans as negotiations persist. Even if they do so, the new orders would only account for two-thirds of what they ordered in 2017.
Last year, Beijing imposed tariffs in response to Trump’s duties. They then stopped buying soybeans, which caused the price of American beans to fall drastically.
"We need to see either a promise to buy as much as they have purchased in the past or an increase," Kimberly said. "If we don't, we're going to be behind the eight-ball for several years before we'll be able to catch up."
The Department of Agriculture predicts that the American soybean export market won’t recover to levels from last year until 2024.Still, some farmers, like Austin Rinker, are planning to plant the same amount of soybeans this year as he did last year.
"Last year was a good year. We shipped everything off the farm," Rincker said. But he continued, "Farmers, without a doubt, have a lot of risk on the table. It's been a lot of wait and see for us, but they'll have to come to an agreement eventually," he said. "China was our No. 1 market."
Chinese demand for soybeans is also expected to slow as Chinese farmers use less protein in their animal feed, which is their primary use for the beans.