U.S. farmers balance storage and crushing demand growth
After months of tension, China has agreed to buy 12 million metric tons of U.S. soybeans this year — less than half its typical volume. While the agreement brings some relief to farmers, it does not erase the lasting effects of the trade dispute.
The deal, following negotiations between leaders of both countries, sets a goal of 25 million metric tons annually for the next three years. Yet, skepticism remains about China’s commitment, given its recent preference for cheaper Brazilian soybeans.
Soybean farmers across the Midwest are adapting by storing more of their crop, hoping for price improvements. According to economist Tanner Ehmke of CoBank, storage is a risky but necessary move for many. “We’re having a hard time finding a profit on our farm,” he noted.
Domestic processing, or “crushing,” has become a key outlet for U.S. soybeans. New crushing plants in Iowa, Nebraska, Kansas, and North Dakota have expanded capacity, driven by renewable diesel demand. The U.S. Department of Agriculture expects record-high crushing levels this year, up 10% since 2017.
However, analysts warn that the U.S. cannot process enough soybeans to offset China’s reduced purchases. “The limit there is always going to be that physical capacity, and we just don't have the physical capacity to increase crush enough this year to offset China,” said Scott Gerlt, an economist with the American Soybean Association.
Farmers in southern states like Missouri and Illinois may fare better due to access to river routes and processing facilities, while those in northern regions face limited export options. With record yields and low prices, many are waiting for markets to shift before selling.
“They all get sold and used somewhere, but the price just goes down when the demand is lower,” said Illinois farmer Brady Holst. “The supply is always going to remain the same.”
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