WJ Editorial
WJ Editorial

Ag Export Groups Making The Best Of Trade Situation

On the trade war front, the news continues to be uncertain. Time and time again, we hear that trade talks with China are near fruition, only to be delayed yet another time. No doubt all the leaks about progress (including some Chinese soy buys to smooth relations) are part of the negotiating game, as are President Trump’s tweets, the latest of which sent stock markets tumbling once again.

In the meantime, the tariff wars have combined with unprecedented rainfall and flooding to hit American farmers with a one-two punch. Knowing that farmers were among Trump’s strongest supporters in the 2016 election, Chinese soybean tariffs were designed to hit at his base.

The immediate reaction among the various ag trade promotion and export groups has been to get busy to mitigate the damage.

In this issue, we report on an item in the e-newsletter of the Illinois Soybean Association (ISA). For years now, China has been by far the largest customer for U.S soybeans. But while Chinese buys of American soybeans are down 60 percent from a year ago, overall American soy exports are “only” down by 18 percent compared to this time last year.

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As the association’s Eric Woodie wrote, “Other countries are easing the pain of China’s actions by importing more [U.S.] soybeans,” including Mexico (up 30 percent) and Indonesia (up 16 percent).

While an 18 percent drop certainly cannot be called good news, it’s not as bad as it could have been. Low prices are partly responsible, and the aggressive marketing efforts of the various soy and export councils have helped.

According to data gathered by the ISA, the number of soybeans shipped in containers to Asian countries has grown 40 percent since the 2014–2015 crop marketing year, from 2 million metric tons to 2.8 million metric tons. Indonesia is the top buyer of container shipments of soybeans at about 1.4 million metric tons, followed by Thailand, Vietnam and Malaysia.

No, the other Asian countries can’t replace China. Before the trade wars erupted last year, China bought nearly 60 percent of U.S. export soybeans. China is coping with issues other than the tariff wars as well; a massive swine flu outbreak has decimated Chinese swine herds and might have contributed to a drop in U.S. soy purchases even without the tariff dispute. In the first 10 months of 2018, U.S. soybean exports to China dropped to 8.2 million metric tons from 21.4 million metric tons a year earlier.

But the ISA also reports that the U.S. trade imbalance with its trading partners, thanks to the booming U.S. economy, has accelerated interest in filling empty U.S. containers with soybeans and other grains for foreign markets like Indonesia and other Asian countries that require identity-preserved grains for many types of human consumption.

More containerization of export grain will benefit ongoing efforts to develop true, permanent container infrastructure on the rivers. And that will benefit farmers, shippers and the barge industry in the longer term.