Trade war threatens Kansas soy industry, despite record yields

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TOPEKA (KSNT) – The soybean industry is expecting record-breaking yields, but a continued trade war with China threatens profits for farmers in Kansas and across the country.

Soybeans are a big deal in Kansas. More than 12,000 farmers grow soybeans, producing about 200 million bushels a year on 4.7 million acres, according to Kansas State University’s Department of Agronomy. That’s good for 10th place nationally, and the industry generates about $1.3 billion for the state’s economy.

Last year, Kansas farmers produced 154 million bushels across 4.4 million harvested acres. This year, Kansans produced over 158 million bushels, despite less acres and drought issues, according to American Soybean Association Chief Economist Scott Gerlt.

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The U.S. Department of Agriculture is predicting record-breaking yields of 53.6 bushels per acre this year, topping the previous record of 51.9 set in 2016. For Kansas, the value of soybean production is expected to total $1.49 billion, up 17% from the previous marketing year. But soybean price for the state is projected to average $9.65 per bushel, down $2.65 from the last marketing year. Although production going up is generally a good thing, foreign demand is waning, and a smaller percentage of U.S. soybeans are going to the world’s top buyer, China.

“In response to tariffs the U.S. imposed on Chinese goods during the 2018 trade war, China imposed a 25% retaliatory tariff, which effectively priced U.S. out of the Chinese market. This was on top of the 3% Most Favored Nation (MFN) tariff, and a sliding Value Added Tax (VAT) on U.S. soybeans.

The U.S. Department of Agriculture (USDA) estimates U.S. soybean farmers experienced $9.4 billion in annualized losses during the 2018 trade war, accounting for a staggering 71% of the $27 billion total loss in agricultural exports suffered by U.S. farmers during that time.”

“China – Trade Paper” released by the ASA on Aug. 19

Now, Brazil’s exports will supply 60% of global soybean imports, according to the ASA. China does still buy U.S. soybean, particularly through the fall and winter, but as soon as Brazil’s harvest becomes available these orders halt entirely.

Brazil has been responsible for an average of 70% of China’s total soybean imports since 2018, according to the ASA. The lower cost, favorable exchange rates and additional infrastructure investments from China have expanded profits for Brazilian producers, taking away business from American farmers.

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“The combination of 20% retaliatory tariffs as well as VAT and MFN taxes have pushed China’s overall duty rate on U.S. soybeans to 34% in 2025. While the new retaliatory rate is 5% lower than during the 2018 trade war, the added retaliatory duties will keep U.S. soybean prices prohibitively more expensive than South American soybean supplies ahead of U.S. harvest this fall. As a result, China currently has zero new crop export orders for U.S. soybeans on the books for MY 2025/26. Other countries have not made up the difference either, with new crop sales down 81% from the five-year average.”

“China – Trade Paper” by the ASA

The ASA reports the 2025 U.S. soybean crop is expected to hit 4.292 billion bushels, the sixth-largest harvest on record. Reduced imports from countries like the European Union, Iran and Vietnam are also tightening global supply, helping keep prices somewhat stable. But with the export outlook currently, farmers are not guaranteed to earn enough revenue to cover production costs from this growing season. This caused the ASA to send a letter to President Donald Trump on Aug. 19 urging him to prioritize soy in U.S.-China trade talks.

All is not bad for soy, however. A growing demand for soybeans in the U.S. is fueled by soybean oil used in cooking, soybean meal used to feed livestock and soy-based biodiesel, which is used to power trucks, buses, heaters and industrial equipment. Particularly soy’s use in renewable fuels, and potential policy regarding it, could provide significant boosts in domestic demand. Kansas alone produces about 60 million gallons of soy-based biofuel every year, creating jobs and increasing demand for Kansas farmers.

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Many things could still happen to change the price of soy this year. Gerlt said if China stays out of the U.S. market, soy prices will continue to fall, but if biofuel blending levels increase then prices could continue to hold or even increase.

27 News will update this story as the situation develops.

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