In a year that has otherwise been a tough slog for soybean producers and other farmers in the United States, a silver lining emerged this week: China, the world’s largest importer of soybeans and many other commodities, booked purchases of about 644,000 metric tons of U.S. soybeans for delivery in the 2020-2021 marketing year, according to the U.S. Department of Agriculture.
The purchase is approximately equal to 24 million bushels.
Scott Stiles, Extension economist for the University of Arkansas System Division of Agriculture, said that while the single-day purchase is notably large, it wasn’t quite record-breaking and the timing was in keeping with normal cycles.
“China typically sources their soybeans from Brazil from late January through August or September,” Stiles said. “Once their supplies are exhausted, they usually begin sourcing them from the United States. They’ll buy from us through January or so, whenever the Brazilian harvest gets in the export pipeline.”
While the purchase is not inherently part of the “Phase One” U.S.-China trade agreement, which went into effect in February of this year, it will count toward fulfillment of those obligations, Stiles said.
The U.S. Department of Agriculture requires U.S. exporters to report any single-day sale of 100,000 tons or more of a single commodity. So while “the public doesn’t necessarily see every purchase made by a foreign buyer,” Stiles said, “there have been weeks recently where China is making a significant purchase every day.”
According to the USDA, China is projected to import approximately 99 million metric tons of soybeans in the 2020-21 marketing year, or more than 8 million metric tons each month, on average. The September purchase is the latest in a string of large purchases from China.
According to the U.S.-China trade agreement, China committed to an annual purchasing target of $36.6 billion in U.S. agricultural products. As of July, China had purchased only about $9.9 billion in U.S. agricultural products, well behind its year-to-date target of about $21.3 billion, according to the Peterson Institute for International Economics.
The 2019-2020 marketing year did mark a 20% increase in U.S. soybean sales to China, jumping from about 14.2 million metric tons during the 2018-2019 year to more than 17 million metric tons, according to the recent USDA Export Sales report. Also of note is the tremendous increase in new crop soybean sales to China compared to the same period a year ago — 15.4 million metric tons for the 2020-2021 marketing year, versus about 864,295 metric tons in September 2019.
While the soybean purchase is not specifically a boon to Arkansas growers, Stiles said the state’s proximity to the Gulf of Mexico is an advantage.
“Most of our soybeans are earmarked for export, one year to the next,” he said.
And while Arkansas growers have had their own weather challenges to deal with, growers in other states have had it worse. In August, a windstorm known as a derecho pulverized about 14 million acres of farmland in Iowa, damaging more than 5.6 million acres of soybean — more than half the 9.1 million acres the state planted in 2019 — and more than 8 million acres of corn.
Stiles said the impact of the derecho won’t truly be known until harvest is complete. In a recent Crop Production Report, the USDA’s National Agricultural Statistics Service adjusted its forecast for U.S. soybean production down 3% from previous forecasts to 4.31 billion bushels, with an average record high of 51.9 bushels per harvested acre.
According to the report, Arkansas growers are projected to average 49 bushels per acre, with total 2020 production of about 142.6 million bushels.
The University of Arkansas contributed this article.