US farmers got some very good news. China has agreed to purchase a minimum of 25 million metric tons of US soybeans per year for the next three years. If true, that would mark a historic shift. The latest example came during the U.S.-China trade war when China completely stopped purchasing American soybeans in retaliation for the tariffs enacted during the Trump administration.
As a result, in the last 10 years China’s imports of soybeans have increasingly been coming from Brazil and the rest of South America. While US ag exports to China hit a new all-time high in 2022, it wasn’t long before they suffered a steep reduction. The COVID-19 pandemic upended many aspects of the U.S.-China trade relationship. It divided out familiar supply chains, including ag imports, contributing to the agricultural exports nosedive.
As the world’s largest buyer of soybeans, China has unparalleled power to shape global markets. Last year, more than half of all Chinese imports from the US – over $12.5 billion – were soybeans, totaling nearly $24.5 billion in total US exports to China. The story behind these imports has shifted drastically. In 2022, Brazilian beans accounted for more than three-quarters of all the soybeans China imported. At the same time, the US share fell off a cliff to a mere 21%.
China is reportedly moving in the direction of stabilizing trade relations. They intend to buy 12 million metric tons of US soybeans in the coming months, through January. This volume amounts to less than half of the average annual import volumes. The safe harbor agreement represents another step towards the recovery of US-China trade relations. It provides an excellent basis for hope that China will return to its traditional levels of buying American soybeans.
The deal would also be strengthened by China’s commitment to eliminate its retaliatory tariffs on U.S. ag products. This move will increase the demand for rotting crops and importing more beef. It will restore pathways that were greatly closed off in the depths of the trade war. Additionally, China has announced plans to restart purchases of US sorghum—most of which is processed for animal feed.
In the past, China’s imports of US soybeans were usually in the range of 25 to 30 million metric tons. Those numbers have plummeted since the beginning of the trade war in the spring of 2018. The recent Chinese commitments reflect an interest in repairing relationships and getting back to mid-2018 purchasing levels.
Industry proponents are hailing these advances as a major victory for US agriculture. They have already been beaten back by many waves of changing trade policy and global competition. For the last two decades, agricultural trade has been the bedrock of the long-standing relationship between the US and China. Newly emerging collaboration might provide the needed stability, benefiting American farmers in the process.
