U.S. Soybean Exports Show Signs Of Recovery – Even As China Pivots Elsewhere

Soybean farmers across the U.S. Midwest have found themselves caught in the middle of an expanding trade war storm between President Trump and Beijing.

Overnight, Trump threatened to halt trade in cooking oil with China, warning of an “Economically Hostile Act” that he said is deliberately “causing difficulty for our soybean farmers.” The tensions follow reports from weeks earlier showing that China had abandoned U.S. suppliers in favor of growers in Brazil and Argentina.

UBS analyst Simon Penn noted to clients earlier:

U.S. President Donald Trump claimed that China’s decision to stop importing U.S. soybean was an “Economically Hostile Act”. He said he was prepared to retaliate by refusing to allow the U.S. to import Chinese cooking oil. Note – Trump is referring to used cooking oil. China exports it to the U.S., who in turn, turn it into bio-fuel. But cooking oil is a side-show relative to soybean. U.S. cooking oil imports from China were a record $1.2 bn last year; China soybean purchases from the U.S. were worth $12.6 bn.

The last several days have been a rollercoaster of headlines from the Trump administration, sparking turmoil across global markets, especially at the end of last week when Trump threatened China with 100% tariffs in response to Beijing imposing strict export controls on rare earth minerals. 

By the start of this week, rhetoric from the White House was dialed back, and by Wednesday morning…

• Futures Rise After Strong Earnings Ease Trade War Fears

With soybeans at the center of the trade spat, the latest trade data of U.S. soybean exports shows somewhat of a surprising trend: Although the ongoing government shutdown has paused many of the USDA’s reports, the agency managed to release its weekly export inspections one day late due to Monday’s holiday, which shows U.S. exports of soybeans hit their highest levels since Feburary. 

U.S. exports shipped 994,000 tons of soybeans last week, with major destinations including Bangladesh, Italy, Spain, and South Korea. This comes as the top buyer, China, remained absent from the market. 

Even with soybean purchases now trending in the right direction, top buyer China remains removed, and this is due to Beijing having leverage over Trump in upcoming trade talks. As a result, the Trump admin has proposed a $14 billion farm bailout using tariff funds collected to cushion farmers.

The game between Trump and Xi is all about leverage. Both leaders are expected to meet at the Asia-Pacific Economic Cooperation (APEC) forum in South Korea in late October. U.S. Treasury Secretary Scott Bessent confirmed on Tuesday the meeting was still on despite trade tensions.