NPR's Planet Money shed some light on the upcoming soybean issue last month in their "indicator" segment.
Since most of you run from contrary information I'll fill you in. The Indicator is a 10 minute podcast where the two or three hosts pick a data point and tell a story on why they picked that data point.
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WONG: My indicator is 0, as in American soybean farmers have received 0 new orders from China for the upcoming year. And to put that into perspective, usually around this time, Chinese buyers have already put in orders for around 14% of their total purchases.
GUO: Oh, no.
WONG: "Oh, no" is right. And when I say year, I'm talking marketing year, which is the 12-month period that begins at harvest. And the marketing year for soybeans starts on September 1. It's right around the corner. And the American Soybean Association said recently that the export outlook is grim. And that's because the fallout from the 2018 trade war plus what's happening now with China putting retaliatory tariffs on US soybeans.
WOODS: So can the US sell to other countries?
WONG:
We can, but China is the top buyer of American soybeans-- very hard to replace. It accounted for more than 50% of US soybean exports in the previous year. Your next biggest buyer is the European Union, but they're only around 10%.
GUO: So help us put this in perspective, right? Like, the last trade war in 2018, what did China do then?
WONG: China also cut way back during that period. So if you look at, let's say, 2018 to 2020, the value of American soybean exports to China was roughly cut in half. And the US Department of Agriculture said that trade war resulted in soybean farmers losing over $9 billion in annualized losses. And then exports did recover somewhat afterward. But there's another huge soybean producer that's been selling a lot to China.
WOODS: I think I can guess. It is our neighbor to the south, Brazil.
WONG: Correct. Brazil now outproduces the US in soybeans. And the American Soybean Association says that Brazilian and US soybeans are priced about the same during normal times. That is when there's no trade war. We are not in normal times right now. And now because of some retaliatory tariffs plus some other taxes, American soybeans are more expensive.
GUO: OK, but is there any chance that maybe the orders from China this year are just, you know, delayed, that they're still coming?
WONG: Yeah, maybe they just got distracted buying the booze instead of soybeans. No. I mean, soybean farmers have usually already gotten a bunch of Chinese orders by now. And the window for exporting soybeans to China runs from September through February, roughly. And then after that, it's prime time for Brazilian soybeans. So China buys from Brazil until the following September. So we're really only looking at a period of a few months when American soybean farmers really want to lock in their Chinese orders.
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Its no mystery why farmers are feeling the pinch.