After President Donald Trump and Chinese President Xi Jinping called a truce on their trade war, China resumed its purchases of soybeans from the United States. However, December soybean purchases from China were far less than previous years.
From the soymeal mixed into the hog feed for the countries massive hog facilities to tofu and soybean oil used in Chinese cuisine to the production of diesel, the demand for soybeans in China is what drives American markets. The country does grow some of its own soybeans and has a few other minor suppliers of soybeans, but those aren’t enough to fill the countries demand for the crop.
Because of the trade war between the presidents and the increased tariff placed on American soybeans, China did not buy any soybeans from the United States during the month of November according to a Dec. 24 Reuters article.
“We need them as a market for our soybeans, most definitely,” said Bill Shipley, former President of the Iowa Soybean Association. “They need us, too, because if they back clear out of the market with United States soybeans, that essentially leaves them with one supplier for the majority of their beans. When you limit yourself to just one supplier, there’s not much competition in the market. They (the supplier) know that so they price accordingly. Brazil soybeans are a lot higher than ours right now, and the rest of the world is coming to the United States to buy beans, which is great.”
While China wasn’t buying soybeans directly from the United States, it’s possible that American soybeans were finding alternative routes into the country’s supply chain because the U.S. exports soybeans to other countries, such as Brazil and Argentina, which China purchases from.
“China has been known to buy American grain and then reject it upon arrival, send it somewhere else, then have it come back,” said Iowa State Senator Tom Shipley.
“I just hope they get this resolved and get our market back,” said Bill. “In the last eight years, we went from 52 percent of their soybeans came from the U.S. down to just 38 percent before the tariffs. We would like to be their majority supplier. I don’t know if that will ever happen, but it doesn’t hurt to ask.”
Weather affects markets
Although it’s January, there are still some soybeans left in the field and farmers are still trying to get them harvested.
“That’s been Mother Nature,” said Bill. “That has nothing to do with markets. We had two and a half wet weeks of weather in October and that put us two and a half weekd behind. And here, where I live, we’ve been getting snow since Nov. 9. We’re running right now because the ground is hard.”
“An important note is that the world likes our beans —western corn belt beans in particular as they are the best quality,” said Tom.