New data the Agriculture Department released Friday created serious doubts about whether China will really buy millions of bushels of American soybeans like the Trump administration touted last month after a high-stakes meeting between President Donald Trump and Chinese leader Xi Jinping.
“We are still not even close to what has been advertised from the U.S. in terms of what the agreement would have been,” Ehmke said.
Trump said his team spoke with Chinese officials today and they assured the White House they would be purchasing more soybeans, but he didn’t offer any details of how much.
“They’re in the process of doing not only a little bit but they’ll be doing a lot of soybean purchases,” he told reporters.
The Chinese tariff on American beans remains high at about 24%, despite a 10-percentage-point reduction following the summit.
Soybean prices fell sharply by 23 cents to $11.24 per bushel Friday. Ehmke said “that’s the market being shocked by the lack of Chinese demand that was confirmed in USDA data today.” Prices are still higher than they were before the agreement when they were selling for $10.60 per bushel, but the price may continue to drop unless there are significant new purchases.
Soybean prices are actually still a little higher than they were a year ago even without China’s normal purchases of roughly one-quarter of the U.S. crop. That’s because this year’s soybean crop is a little smaller while domestic demand remained strong with the continued growth in biodiesel production.
But farmers are dealing with the soaring cost of fertilizer, seed, equipment and labor this year, and that is hurting their profits. The Kentucky farmer who is president of the American Soybean Association, Caleb Ragland, has said he worries that thousands of farmers could go out of business this year without significant Chinese purchases or government aid.
Ragland said he’s still optimistic that China will follow through on the purchases, but it’s hard to be confident in that right now with so few sales reported.
“We don’t want to assume they won’t. But it’s going to be a wonderful day when we actually deliver those soybeans, and when there’s my money in hand and so forth and the transaction’s complete,” Ragland said.
China is the world’s largest buyer of soybeans. China bought more than $12.5 billion worth of the nearly $24.5 billion worth of U.S. soybeans that were exported last year.
Ragland said that every vender he talks to has told him they are increasing their prices for next year, which will continue to put pressure on farmers.
“We’re still looking at sharp losses and the red ink as we figure budgets for 26 is still very much in play,” he said.
