How the lowly soybean got trapped in the crossfire of the US-China trade wars

Just days after the Trump administration pledged a $20 billion loan to backstop the finances of Argentina under libertarian President Javier Milei, China bought billions of dollars worth of soybeans from Argentina. The massive agriculture deal ricocheted through international markets, pressuring U.S. soybean prices and providing a bump to Argentina’s currency.

In the middle of a Chinese trade war with Washington, Beijing and Buenos Aires had teamed up to show that the world could live without American soybeans.

Some U.S. farmers saw this as a betrayal by Argentina. “We paid all our taxpayer money to help out a foreign country," said Buchholz, and then “they basically cut our throats."

Last week, President Trump and Chinese leader Xi Jinping agreed to lower trade tensions after meeting in South Korea. Trump said he would cut tariffs on Chinese goods if Beijing curtailed exports of ingredients used to make the powerful opioid fentanyl. China pledged to buy 12 million metric tons of American soybeans during this harvest season and 25 million metric tons a year for the next three years, Treasury Secretary Scott Bessent said.

“Our great soybean farmers who the Chinese used as political pawns—that’s off the table. They should prosper in the years to come," Bessent said.

But many American farmers are still feeling like pawns. China’s gambit underscored the dangers of relying on a national superpower that can damage fortunes by turning off the trade spigot.

Terms of the deal haven’t been made public. Based on what has been released, China agreed to buy fewer U.S. soybeans this year than it did last year. Over the past 10 years, the country has imported an average of 29 million metric tons of beans annually from the U.S.

“I think everybody uses us as pawns," said David Isermann, who farms about 1,000 acres in LaSalle County, Ill. Like many farmers, he is waiting to see whether China actually follows through on its soybean pledge. A large swath of farm country supports President Trump, Isermann said, but “he’s irritated the soybean farmers."

Prices that farmers are being paid for their soybeans are up since the U.S.-China trade deal announcement. But at Walsh Grain Terminal in northeast North Dakota, the recent per-bushel price under $10 still makes the oilseed a money-loser for most growers.

Marvin Yoder, who farms more than 2,000 acres of corn and soybeans in Jacksonville, Ill., said he drove about 80 miles south to the St. Louis area. The Mississippi River port will buy his beans for about 40 to 45 cents more than the local grain elevator near him.

Yoder said the Trump administration’s trade deal may help farmers’ finances in the short term, but it won’t solve the bigger issue: Brazil. The U.S. farmer once dominated global agriculture exports, but the rest of the world has caught up, he said.

“Brazil keeps expanding every year, they’ve got cheap land and labor," he said. “They’ve got some sharp farmers down there too."

Bad timing

The market uncertainty comes at a bad time for American soybean farmers. This year’s crop was projected to be one of the biggest ever, leaving growers with more beans than places to send them.

Their costs are rising, and prices are low. Some farmers who have already sold bushels from this year’s crop are facing financial losses. President Trump has pledged a multibillion-dollar bailout to keep farms afloat.

Mike Dahman, who farms about 8,000 acres in Winchester, Ill., said soybeans have been a losing financial proposition this year. Between costs for renting the land and his operating expenses, he estimates that he’ll lose roughly $100 per acre harvested.

Dahman has been storing most of his crop this year instead of trying to sell it. He drove a truckload of his freshly harvested beans last month to a Cargill-owned storage elevator in Florence, Ill., but was turned away while the facility unloaded its crop onto a barge. He sold it to a neighboring elevator instead for a slightly lower price.

“If you’re raising beans, you’re probably going to lose money," Dahman said.

The China story

China, by far the world’s biggest importer of soybeans, helped turn the oilseed into America’s second most planted crop. The U.S. Soybean Export Council, a trade group, opened a Beijing office in 1982 to spread the word about protein-packed U.S. soybeans used to fatten livestock.

During the 1990s, China’s expanding middle class acquired a preference for pork and poultry, making large quantities of soybeans essential. In response, American farmers shifted millions of acres away from crops such as wheat, especially in the Great Plains.

Roughly half of all American soybeans are exported each year. The rest are processed into oil for cooking and biofuels, such as diesel, and meal for livestock feed. Technological advancements from the world’s largest seed and pesticide companies are expected to help farmers raise more soybeans per acre in the years ahead.

An entire logistics chain sprouted around soybeans and to support shipments to China—plants that crush and process beans into oil, rail lines and upgrades to West Coast ports. For decades the oilseed has supported the livelihoods of thousands of farmers and rural American economies who had relied on sales to China.

A pivotal change came during Trump’s first term, when he imposed tariffs on China that touched off a broad trade war. This led to a drastic decline in Chinese imports of U.S. soybeans, severely impacting American farmers. To offset these losses, the government provided around $23 billion in compensation to soybean growers in 2018 and 2019.

Exports later rebounded, but China has since spent tens of billions of dollars building up the agriculture supply chain and infrastructure of South America, specifically Brazil, according to industry officials. Cofco, a Chinese state-owned agricultural giant, is developing a massive port terminal on Brazil’s coast for soy and corn exports.

Brazil overtook the U.S. as the world’s top soybean exporter over a decade ago, helped by an influx of investment and lots of arable land. Last year, the country accounted for 70% of China’s soy imports, double the share from 15 years ago.

Brazil’s been criticized by leaders and NGO groups for tearing down the Amazon rainforest for agriculture production. At a conference earlier this year, Deputy U.S. Agriculture Secretary Stephen Vaden said Brazil’s deforestation was an unfair trade practice that gives it an edge over U.S. farmers.

Trump ratcheted up trade tensions with China after returning to the presidency. Administration officials believed that China needed U.S. beans and tough talk emerged as a tit-for-tat battle on trade barriers ensued between the countries. China didn’t stand idle.

Argentina in September dropped its 26% export tax on agriculture exports until sales reached $7 billion. Days later, it sold most of that amount to China, including dozens of cargoes of soybeans.

Argentine officials saw the export-tax holiday as a way to bolster the country’s sagging peso, according to a social-media post by the then-presidential spokesman. But coming as it did in the middle of a $20 billion financial rescue engineered by the Treasury Department, many in the U.S. farming community felt stabbed in the back.

Treasury Secretary Bessent was sitting in the 80th session of the United Nations General Assembly in September when he read a text message from a displeased colleague. “Soy prices are dropping further because of it," wrote Agriculture Secretary Brooke Rollins, adding, “This gives China more leverage on us."

American agricultural trading outfits such as Cargill—the country’s largest private company by sales—and Archer Daniels Midland were the ones carrying the Argentine beans overseas to China. It’s part of the way that traders make money from activities outside the U.S., even as American soybean farmers are getting crushed by a narrowing export funnel.

Countries like Brazil are slated to help expand production of agricultural commodities to feed a growing global population, said Brian Sikes, Chief Executive of Cargill, which buys, sells and processes crops around the world.

“We see South America as an investment, for sure," Sikes said, adding that the company’s most significant investments during the past three years are the U.S. and Brazil. In Brazil, Minnesota-based Cargill has invested roughly $1.5 billion over the past five years, including in soybean crushing and processing facilities.

Uncertain future

Trade groups representing U.S. farmers cheered Trump’s trade deal with China.

“Expanding markets and restoring purchases by China will provide some certainty for farmers who are struggling just to hold on," said American Farm Bureau Federation President Zippy Duvall.

Still, farmers and industry analysts caution that tensions between China and the U.S. could deteriorate, putting soybean growers back in a bind.

“There’s a cautious sense of optimism," said Arlan Suderman, chief commodities economist at market research firm StoneX. “But also a knowing reality that the two countries are far from settling all of their differences, leaving us vulnerable to re-escalation at any point that could unravel these agreements."

Archer Daniels Midland Chief Executive Juan Luciano said this week that the timing of any benefits from President Trump’s recent trade deal with China remains uncertain.

“We really need this clarity on the trade deal," Luciano said. “On the surface, it is possible, it is positive for ADM and for grain in general [but] we haven’t seen yet a joint document highlighting the details."

U.S. soybean farmers are making some progress finding other markets.

Between September and early October, soybean export volumes, excluding China, were up about 45% from the same time last year, said Jim Sutter, who runs the U.S. Soybean Export Council.

Animal feed processors and food companies in Thailand, which consistently buys from Brazil, have picked up their U.S. soy purchases. Bangladesh, Pakistan, and European countries are also increasing their purchases. North African countries like Egypt and Morocco present growth opportunities, Sutter said.

Still, it doesn’t completely offset China. The country’s large purchases of beans each week during the U.S. harvest season provide certainty for farmers. Purchases from other nations are more variable, which increases storage costs for farmers and creates a more unpredictable market.

Greg Amundson, who farms on about 3,000 acres in northeastern North Dakota, said in a normal year all of his soybeans would go to China.

This year, he’s trucking them to a soybean crushing plant—where the beans are ground into oil and meal for livestock feed—but has been frustrated by the prices being lower than he’d prefer. Those cents per bushel can make all the difference between turning a profit and losing money this year.

Signs of trouble emerged in the farm economy before Trump took office. A glut of corn and soybeans after several years of bumper crops has depressed prices. Amundson’s fertilizer costs are about $100 a bag higher than last year. Seed costs are also up about 10% to 20%.

Amundson said the trade deal with China should add some stability to the market. Despite that, there’s still an oversupply of soybeans globally, where prices are still not high enough to make up for rising farmer costs.

“Short term this doesn’t do a lot," he said. “There are just too damn many beans in the world, that’s why prices are so low."