U.S.- China Trade War May Reshape U.S. Agriculture by Planting More Corn

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U.S. Corn - U.S.- China Trade War May Reshape U.S. Agriculture by Planting More Corn

For decades, corn has been the preferred crop for American farmers, with tall stalks covering the Midwest. But in recent years, because of the growing demand from China, soybeans have begun to compete with corn. In 2018, American farmers have grown more soybean than corn, the first time in more than 30 years.

But China’s tariffs on U.S. soybeans have hurt American farmers: in the past seven weeks, U.S. exporters have sold less soybeans to China than they did last fall. China is usually the largest foreign buyer of soybeans. Soybeans exported from the Pacific Northwest ports have recently fallen by 82% from the same period last year.

Also Read: US Farmers Disconcerted in Trade War

Soren Schroder, chief executive of grain-trading giant Bunge Ltd., said, “Prices will tell you that you would see a significant shift out of soybeans toward corn in the U.S.” American farmers hit by the U.S.-China trade are preparing to reshape the American farm belt. Some analysts say that next spring, farmers may convert up to 4 million acres from soybeans to corn.

Many farmers and agricultural officials said that the final choice may be made weeks or days before planting, partly because of tariff uncertainty. The outlook for soybeans is worrying. But analysts said that redirecting more farmland to corn could boost the development of crop seed sellers and fertilizer suppliers.

For seed companies such as Bayer AG, DowDuPont Inc. and Syngenta AG, corn is often a more profitable product, at least in the short term. Because corn has a long growing season, it is more susceptible to weeds and destructive bacteria, which means that farmers usually buy expensive seeds in the spring, and these seeds are implanted with pest-resistant genes. Because corn produces more per acre than other crops, seed companies can charge a higher price for a bag.

This would also be a boon for fertilizer companies, especially nitrogen suppliers CF Industries Holdings Inc. and Nutrien Ltd. Corn crops cannot produce nitrogen fertilizers themselves like soybeans, so farmers need to use nitrogen fertilizers in farmland in the fall and spring to increase production.

Researchers at the University of Illinois estimate that farmers who grow corn on land rented in northern Illinois next year will lose $64 per acre, while soybeans lose $95 per acre. The researchers said that it is the first time since 2013 that the economic benefits of corn have exceeded soybeans.

Finding sales channels for a surge in corn supply is a challenge. Ankush Bhandari, head of economic research at US cereal trader Gavilon, said that although U.S. pig and chicken farms are expanding to supply new processing plants, the number of new animals may not be enough to digest all the upcoming bushels.

“A lot of that (corn) would have to find its way into the export market,” he said.

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