Chinese demand for U.S. soybeans will not quickly recover, an analysis by a London commodities economist found, underscoring fears among Midwest farmers that the effects of animal disease and the trade war will linger into 2020.
“Regardless of the outcome of U.S.-China trade talks, we think lower Chinese consumption will weigh on the price of soybeans next year,” wrote Caroline Bain, chief commodities economist for Capital Economics.
Bain forecast this week that the price of U.S. soybeans will drop in 2020 by about 40 cents to $8.50 per bushel.
China typically consumes just under one-third of the global soybean crop and accounts for about two-thirds of the world’s trade in soybeans.
When President Donald Trump launched the trade war with China in the summer of 2018, soybean prices dropped from about $10.40 per bushel to under $9 per bushel. Prices haven’t risen much above $9 since.
Minnesota soybean farmers, many of whom grow their crop specifically for export to China, have seen worse prices than farmers in other parts of the Midwest. U.S. soybean farmers have been the chief recipients of the trade war bailout, which now totals as much as $21 billion.
Farmers have said since 2018 they worry that the Chinese market for their soybeans may never recover.
“The consequence that we’re most concerned about in agriculture is that once you lose [the] market, it’s hard to get it back,” Kevin Paap, president of the Minnesota Farm Bureau, said in November.
Bain, the commodities economist in London, said African swine fever has killed at least 40% of China’s hogs, which resulted in lower demand for soybeans.
China’s soybean consumption should rise again in coming years as the illness runs its course, Bain said.
“But, for now, there is no vaccine, and pig farmers are likely to remain cautious about repopulating their farms,” she said.