U.S. President Donald Trump said the European Union will start buying soybean right away as China’s retaliatory tariffs curb demand, however, the two sides seem to explain the details of their agreement in completely different ways.
At a roundtable event in Iowa, Trump exclaimed excitedly to the audiences, “We just opened up Europe for you farmers… you have just gotten yourself one big market.”
Unfortunately, on the other side of the Atlantic, a EU spokeswoman Mina Andreeva told reporters in Brussels, “When you read the joint statement … you will see no mention of agriculture as such; you will see a mention of farmers and a mention of soybeans, which are part of the discussions, and we will follow up that.”
However, does the EU really have the ability to help Washington solve the soybean issue that arises from China’s counter-attacks?
The European market is one of the few alternatives for U.S. soybean farmers, but it is far from China’s purchasing capacity. Last year, China’s imports of soybeans from the U.S. were $12.3 billion, while EU imports were only $1.6 billion. Europe’s demand for U.S. soybeans is expected to be about 15.3 million tons in 2018-19, which is less than one-sixth of China’s estimated purchasing capacity. China’s counter-measures, the loss of soybean sales and the political pressure from Trump’s own and agricultural state Republicans in Congress, which Europe won’t be able to relieve.
Before the U.S. and EU reach an agreement, due to market prices, the EU has begun to increase imports of U.S. soybeans. It is expected that the prices of U.S. soybeans are at least $20 a tonne lower than from Brazil for August. A senior EU official said that although EU agreed to increase imports of U.S. soybeans, the European market demand will eventually determine the imports amount.
U.S. soybeans account for about one-third of total EU imports, and even if Europe increases the imports amount, it will have limited help for U.S. soybean exports. Today, as a result of U.S.-EU deal and U.S. financial subsidies, U.S. soybean prices have rebounded to $8.59 per bushel, but a recent University of Illinois analysis found that unless the soybean price can rise to $10.05 per bushel, the U.S. soybean farmers still can’t make a profit.
For U.S. soybean farmers, they need a stable export market rather than a government relief check, and the new European market that the Trump administration is looking for doesn’t have the ability to create the soybean orders rejected by China. For more than 3.1 million farmers in the United States, the Chinese market they have been working hard on for decades is being lost.