Even though a Chinese trade delegation recently visited Chicago for the annual U.S. Soy Global Trade Exchange meeting, future soybean deals between the U.S. and China are in doubt.
Jim Sutter, CEO of the U.S. Soybean Export Council (USSEC), says China will still take about 18.4 million bushels of U.S. soybeans from the "goodwill" purchases they made earlier this year. But, uncertainty exists if and when there will be any more purchases, as the trade war between the two nations escalates.
Chinese government officials indicated in early August the country would halt purchases of U.S. agricultural products after President Donald Trump announced the U.S. would place a 10% tariff on $300 billion of Chinese imports effective Sept. 1.
It's the latest development in a 15-month trade dispute between the U.S. and China. Previously, the U.S. placed a 25% tariff on $250 million of Chinese imports in an attempt to force a deal with the country to narrow the trade deficit and halt unfair trade practices, including intellectual property theft. China responded by slapping 25% tariffs on U.S. goods.
The standoff has financially hurt U.S. farmers bearing the brunt of retaliatory tariffs on soybeans, pork and other ag products.
"I see the current trade situation as a temporary phenomenon, but we will continue to persevere, and U.S. soybean farmers will keep producing a high-quality, sustainable crop," Sutter said during a news conference at the meeting.
For this year, "Chinese purchases will be one-third of what they were last year, a result of the ongoing trade war with the U.S.," he continued.
China purchased 1.07 billion bushels of U.S. soybeans in the 2017-18 marketing year, according to USDA. In 2016-17, the nation bought a record 1.32 billion bushels.
Kansas farmer Kurt Maurath admits the tariffs have hit farmers in the pocketbook. However, he believes in the president's trade strategy with China.
"Free trade is what's best for our country," Maurath says. "We have to give him the time to get the job done. We just hope it gets done."
SOYBEAN BUYERS UNITE
The seventh annual U.S. Soy Global Trade Exchange and the 16th annual Specialty Grains Conference and Trade Show was held Aug. 20 through 22. It attracted more than 800 soy and grain industry leaders, buyers and suppliers from all over the world.
The jointly held USSEC and Specialty Soya and Grains Alliance (SSGA) meeting featured attendees from 53 countries, including the China trade delegation.
P D[x] M[x] OOP[F] ADUNIT T
Sutter points out USSEC is focusing on trying to increase exports to other destinations.
"We are trying to grow our market share in existing markets and trying to build longer-term new demand in emerging markets. These are some key strategic efforts we have underway," Sutter says.
"This event is one of our largest events of the year, and it allows us to bring together buyers and sellers to highlight the U.S. as a great supplier of choice," he continues.
Various representatives of USSEC and SSGA talked about the challenges facing the U.S. soybean farmer with the current trade war between China and the U.S., along with the difficult planting and growing season this year.
SSGA chairman Curt Petrich, of HCI International Inc., injected it was a "perfect storm" to hit U.S. exports to China because of the trade war tariff issues and the African swine fever (ASF) that has wiped out a great deal of China's hogs.
"We likely would have seen a slowdown in demand due to ASF even if there hadn't been a trade war," Petrich says.
Total U.S. soybean exports topped 2.1 billion bushels prior to the trade war in the 2017-18 marketing year, according to USDA data. Sales abroad for 2018-19 are estimated at 1.7 billion bushels.
USSEC established the "What it Takes" initiative after the trade war started more than a year ago. The organization held trade events worldwide to showcase what it calls the "U.S. soy advantage" in quality and shipping.
"We are looking for new opportunities in the European Union, Pakistan, Egypt and Bangladesh, and other markets," Sutter says.
The goal is to increase demand in existing markets. The initiative is making headway, but Sutter admits, unfortunately, it has not been enough to fully replace the lost sales from China.
The U.S. exported nearly 1.2 billion bushels of soybeans to countries other than China in the 2018-19 marketing year compared to nearly 992 million bushels the previous year, records indicate.
"It takes a while for people to shift purchases," explains John Baize, an international soybean consultant from Falls Church, Virginia.
USSEC and industry officials predict U.S. soybean sales to Europe alone could possibly double to 478 million bushels in the 2018-19 marketing year. While sales increased from a year ago, the total as of Aug. 15 was a little more than 287 million bushels.
Paul Burke, USSEC senior director of soy marketing, says the organization's main objective of "What it Takes" is to create demand, improve market access and differentiate U.S. soy on the world market.
One initiative example he cites includes moving up a soybean buyer's conference for European and Middle East customers in Barcelona, Spain, by a couple of months last November. Price, transportation, logistics and excellent feed value was pushed by exporters.
"It was very successful and resulted in sales," Burke says.
Sutter says USSEC will work as hard as ever developing new markets. That includes a strategic plan to invest more checkoff funds in developing or basic markets like India, Nigeria and other countries.
"We'll work more in nations with high populations that are low in protein consumption," Sutter says. "We want farmers 20 years from now saying, 'Farmers back in 2019 were smart investing in places like that.'"
Maurath loves USSEC's sales plan. The Oakley, Kansas, farmer participated in a trade mission to Japan and Vietnam as part of the Kansas Soybean Commission. He says many countries in Southeast Asia are hungry for U.S. beans.
"Vietnam is importing as much as they can afford," Maurath says. "The population growth is unbelievable. They need our beans."
FOR MORE INFORMATION:
> U.S. Soybean Export Council: www.ussec.org
> Follow Mary Kennedy on Twitter at @MaryCKenn.
> Follow Matthew on Twitter at @progressivwilde.
© Copyright 2019 DTN/The Progressive Farmer. All rights reserved.