We previous noted that USDA Secretary Perdue recently told a group of farmers that eventually the U.S. would again sell a large amount of agricultural products to China. Secretary Perdue did note that the soybean industry had probably became “too dependent” on China and needed to develop other markets such as India, Indonesia, Malaysia and Thailand.
The fact is, like it or not when it comes to soybeans, China is literally the 800-pound gorilla or in this case dragon in the room. The graphic shows the change in U.S. soybean exports as of mid-August from 2017/18 to the 2018/19 marketing year to top destinations in both 1000 tons and percent change.
Note that the marketing year for soybeans goes from September 1 to August 31. This year is essentially complete while the figures for China and world total is on the right hand axis.
With two weeks left in this marketing year, total soybean sales are 54.518 million metric tons and that is off 10.40 million from the 44.119 million exported a year ago for this date. Our sales to China as of mid-August are 11.704 million tons vs. 27.616 million a year ago. That is a decline of 15.912 million.
The fact is we have only been able to make up 5.513 million metric tons of this lost business. There are not too many countries or even groups of nations that have the purchasing clout of China which remains by far the largest buyer of soybeans on the planet.
Interestingly, the country that has really upped their purchases of U.S. soybeans has been Argentina, an agricultural powerhouse in there own right and the world’s third largest soybean producer. Argentina has purchased 1.875 million tonnes of U.S. soybeans so far this year which is 1.742 mln or 1319% above the year-ago level.
Argentina purchases stem from a number of factors including a drought plagued crop the year prior, the ability to buy cheap U.S. soybeans to crush and then export the oil and meal to China and other countries and more recently, that nation’s economic problems that has caused the value of their currency. The peso to tumble in the foreign exchange markets is causing Argentinian farmers to hoard soybean supplies.
Other buyers also accounted for an increase of 3.827 million tons and the four countries cited by the Ag Secretary only accounted for 177,000 ton.