China, formerly the No. 1 customer for U.S. ag exports, will buy a comparatively paltry $9 billion worth of those exports this fiscal year, a startling 45 percent cutback due to the trade war, said the USDA on Thursday. Soybeans in particular are paying the price, with markedly smaller sales worldwide at the same time a record crop will swell the U.S. stockpile to an unprecedented size.
Until recently, 1 in 3 bushels of U.S. soybeans was sold to China, and the oilseed was the leading U.S. farm export to the Asian giant. “Continued trade tensions limit U.S. export opportunities for many products, most notably soybeans,” said the USDA in updating its export forecast. “China is expected to source most of its soybean imports from countries other than the United States.”
China will tumble to fifth place among U.S. export markets, trailing Canada, Mexico, the EU, and Japan, according to USDA estimates. Like soybeans, cotton would feel the impact of the tit-for-tat tariffs. Besides buying 60 percent or more of the soybeans on the world market, China is one of the three largest cotton importers. “Retaliatory tariffs have limited U.S. [cotton] opportunities to China,” said the USDA.
Overall, U.S. ag exports are forecast at $141.5 billion in 2019, down by 2 percent from fiscal 2018 due largely to the reduced soybean and cotton exports. Soybean exports are forecast to contract by 13 percent and cotton by 11 percent. Exports of other products, such as grains, meat, sugar, and horticulture, are expected to hold steady or rise.
“We have picked up the [soybean] pace to other parts of the globe but not enough to offset what we’ve lost to China,” USDA chief economist Rob Johansson told the USDA radio news service. The agency said a smaller appetite worldwide for cotton would further reduce U.S. exports.
To offset the impact of the trade war on U.S. agriculture, the Trump administration has announced up to $4.7 billion in cash payments to cotton, corn, milk, hog, soybean, sorghum, and wheat producers. Agriculture Secretary Sonny Perdue said that there would be a second round of payments. The USDA could announce details next week.
The Trump tariff payments are based on a farmer’s production this year, but since storage space is tight in some regions, some soybean growers have left their crop in the field. The American Soybean Association told its members that the USDA “will accept a producer’s record of bushels harvested. Crops do not need to be stored in bins or a local elevator for farmers to estimate production. … Also, severe quality loss is not a factor in determining eligibility for the payment, just the volume of production.”
Earlier this week, Louisiana Rep. Ralph Abraham said the tariff payments in some cases should be based on a grower’s soybean plantings rather than production. Some growers are unable to harvest or have nowhere to store their soybeans, said Abraham, a member of the House Agriculture Committee.