Last week, Americans learned depressed commodity prices and the escalating China-US trade war had sparked a farm bust across the Midwest region, sending farm bankruptcies to levels not seen since the great financial crisis.
Farmers fear China will never return to US soybean markets, as they have now explored new sources in South America.
According to Hellenic Shipping News, new evidence shows the US is "about to lose its leading position in global soybean exports to South American countries in 2019 as China seeks new import sources" because of President Trump's trade disputes with China.
Argentina, a significant global soybean producer, will dramatically boost its soy exports to China from an average of 7-8 million tons in the last several years, up to 10-15 million tons in 2019, Nicolas Pawlusiak, a spokesperson with the Rosario Board of Trade, which is based in Argentina, told the Global Times last week.
Pawlusiak said the growth in soybean exports from South American countries is directly due to the decline in US exports to China.
US-China trade war shifts soybeans destinations
"China, normally the destination for 60% of all US soybean exports, slashed imports after raising tariffs on US shipments on July 06," reported Reuters.
“Total soybean production in Argentina in 2019 is expected to be more than 50 million tons, of which 15 million tons are for the export market, most of which will be sold to China. It’s twice the average of the past five years,” Pawlusiak said.
Zou Yesheng, deputy general manager of COFCO International Argentina, said that China’s soybean imports from Argentina would be around 10-12 million ton next year. The US exported about 30 million tons to China annually in past years, he added.
Brazil, another winner in the trade war, is expected to produce record amounts of soybean in the 2019 growing year and will increase its exports to China.
The difference between US exports prices for soybeans and Brazilian exports remains wide
The surge in production from South America will directly challenge the US’ leading roll in global supply. This would lead to larger US soybean inventories, as farmers would come under severe financial pressure, thus amplifying the farm bust in 2019.
Pawlusiak said if President Trump's trade war with China continues to escalate, South American soybean exports would move much higher and have even more damaging effects on US farmers.
The US government had recently stepped in, trying to cushion angry farmers whose livelihoods have been blown up by Trump's trade war, which by the way, could turn out to be a significant policy error as the US economy enters a slowdown. The USDA announced a $6 billion bailout that gives farmers relief aid, but the real concerns have yet to come, as it seems 2019 will be a turbulent year for the American farmers.
Video: Nebraska Farmers Feeling Impact Of President Donald Trump's Trade War