This belated report on last Friday’s U.S. trade figures (for August) focuses on soybeans for what should be glaringly obvious reasons. They make up by far the most important sector of the American economy, and any President, like Donald Trump, who risks its well-being for a trifling objective like preventing China’s domination of the world’s industries of the future – via rampant intellectual property theft, extortion, and other predatory practices – must have rocks in his head.
OK, I’m now pulling my tongue from my cheek. But given the massive coverage of U.S. soybean farmers’ woes resulting from Chinese retaliatory tariffs that are ruining their sales in their biggest foreign market by far, it seems appropriate to see what the numbers say. Especially because so far, they’re showing nothing close to a trade-led Soy-Mageddon for American growers.
The latest Census report pegs the August year-to-date current dollar soybeans exports increase at a robust 39.16 percent (from $13.10 billion to $18.75 billion). I’d like to provide the comps for the previous years, but they don’t seem to be terribly consistent with each other.
This rapid growth could well reflect the export front-loading in advance of expected tariffs that’s been widely reported. (For a compelling contrarian view, see here.) As a result, it could disappear completely, or even shift into reverse during the rest of the year. But if soybeans exports do tank between now and year-end, no one would be more surprised than the analysts at the U.S. Department of Agriculture (USDA). They keep raising their full-year 2018 export forecasts (measured in quantity, not value, terms). So why are prices so weak? Largely because even though they professed to be worried about China tariffs, America’s farmers just kept planting ever more soybeans. And planting. And planting. In fact, this year’s harvest is expected to be the biggest ever.
And speaking of the Agriculture Department, the soybeans story doesn’t end with the Census reports data. Why not? Because they differ dramatically from those calculable from the U.S. International Trade Commission’s (USITC) interactive Trade Dataweb search engine. And since the USITC statistics are the ones used by USDA, they’re worth looking at, too.
These year-to-date figures only go up to July so far, but they don’t point to any tariffs-led Soy-Mageddon, either. As with the Census data, the numbers are in current dollars, and rates of change are to their right:
2016: $10.062 billion (+25.67 percent)
2017: $9.076 billion (-10.86 percent)
2018: $8.452 billion (-6.87 percent)
So yes, soybeans exports are down this year, according to the USITC. But they fell during the same period last year too – at a faster rate, even though no China tariffs or threats thereof were on the horizon. Moreover, prices this year have been falling faster than in years past for various reasons – including the actual and threatened tariffs, but as made clear above, not solely because of them.
As mentioned, these USITC figures don’t adjust for these changing prices. But the Commission helpfully provides quantity numbers as well. Here they are for the same seven-month time period, in metric tons, along with the percentage changes:
2016: 20,113 (+9.96 percent)
2017: 22,366 (+11.20 percent)
2018: 24,635 (+10.14 percent)
That is, adjusted for falling prices, soybeans exports have been rising a little more slowly this year than last, but faster than in 2016. And the rates of increase haven’t changed markedly.
Farming is a tough business, and with a genuine U.S.-China trade war having broken out, with no end in sight, no one can legitimately blame American soybean producers for feeling nervous about the fallout. But the evidence keeps getting clearer and clearer that, even in the mixed U.S. economy, supply and demand still play a big role in determining prices, and that soybean growers jacked up the supply enormously in recent years. If they want to get out of their current fix, they’d do well to stop complaining so much about the Trump tariffs and start getting that message.