After a monthslong standoff, China has agreed to buy 12 million metric tons of U.S. soybeans this year — less than half of what the country has historically purchased.
U.S. soybean farmers this fall had faced the grim reality of losing their largest foreign buyer, until President Donald Trump and Chinese President Xi Jinping struck a deal last week. Still, many are holding onto their soybeans, waiting for better prices or selling them to be processed domestically.
“China buys, traditionally, about half the soybeans we export, and we can't replace that amount with domestic usage. It's impossible,” said Tanner Ehmke, an economist with agricultural lender CoBank. “Even if we did, we would have a tremendous amount of soybean meal that we need to find a home for.”
China has committed to buy 25 million metric tons of soybeans annually over the next three years, which tracks far closer to what the Asian giant had been buying before the trade war.
Although China generally purchases the lion’s share of U.S. beans, a portion of the crop is processed domestically each year, also known as “crushing.” Soybeans are ground down in large industrial processors, with roughly 20% of the crushed bean turned into oil and the remainder used for soybean meal, a primary component in some livestock feeds.
U.S. soybean-crushing capacity has been growing in recent years to keep up with rising demand for renewable diesel.
The U.S. Department of Agriculture predicts the share of crushed soybeans will hit a record high for the current market year at 2.49 billion bushels — an increase of more than 10% since 2017. New crushing facilities have opened in the past two years in Iowa, Nebraska, Kansas and North Dakota.
However, the increased capacity to crush soybeans in the Midwest and Great Plains will not make up for what China isn’t buying, agricultural economists and farmers say.
“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, which is based in St. Louis.
New trade deals with countries like Taiwan and rising shipments to Egypt and Vietnam won’t fill the gap either.
But that doesn’t mean American soybeans will be wasted. Some farmers will simply be stuck in a tougher, less profitable market, said Brady Holst, who grows soybeans in west-central Illinois.
“They all get sold and used somewhere, but the price just goes down when the demand is lower,” Holst said. “The supply is always going to remain the same.”
Soybeans yields are predicted to hit record highs in states like Missouri, Illinois, Iowa and Minnesota. Total production is also on track with previous years, according to data from the USDA. That abundance, along with the trade war, has driven soybean prices down.
Soybean farmers in the southern portion of the Midwest, such as Indiana, Illinois and Missouri, will have better options for selling their harvests, economists say. Many are closer to crushing facilities and can also ship their soybeans along the Mississippi River to be exported across the Atlantic Ocean.
However, producers to the north in the Dakotas and Minnesota, who have long relied on railroads to ship their soybean crops west and on to China, will be hit the hardest by the trade war.
More farmers are storing their soybeans
Storing and waiting to sell soybeans is a fairly common marketing strategy among farmers. The middle of the winter can be the big selling season, Holst said.
“Most farmers, I would say, are waiting for a better price,” he said, adding that last week’s trade deal between the U.S. and China may encourage more farmers to sell.
Holst, who also farms corn and wheat, harvested his soybean crop over the past several weeks and stored it in grain bins on the farm. Typically, he’s sold to an Archer Daniels Midland crushing facility on the Mississippi River or a Cargill facility on the Illinois River that ships the whole bean. This year, he’s waiting to sell until the market moves or he needs money to be flowing in, he said.
Other farmers in the northern Midwest are following a similar strategy this year, selling their corn and storing soybeans. “Usually, it is the opposite,” said Ehmke, the CoBank economist.
But storage space is limited — and can cut into growers’ profits. Farmers who store their soybean harvests at outside facilities face elevated insurance and labor costs, Ehmke said.
Another sign that more farmers have held onto their soybeans more this year: Archer Daniels Midland's crushing facility in Decatur, Illinois, announced it would let farmers delay determining the sale price — and store their beans for free. The move also shows that there is strong demand for soybeans to be processed locally, Ehmke and Holst said.
“They don't give storage away for free to the farmer unless they're pretty serious about acquiring commodities,” Ehmke said.
Why has crushing demand grown?
The trade war between the U.S. and China has put a spotlight on domestic soybean processing.
The country’s demand for soybean oil, which is produced by crushing the beans, has been largely driven by a growth in renewable diesel. Most oil refineries are required by law to blend biofuel under the Renewable Fuel Standard, and California’s low carbon fuel standard has also driven demand for more soybean oil, said Gerlt of the American Soybean Association.
Since 2023, the capacity to crush soybeans domestically has grown 14%. In total, there were 68 crushing facilities in the U.S. as of April, according to the American Soybean Association.
Even if all the other facilities planned to be built became operational right now, it still wouldn’t be enough to counteract the drop in Chinese demand. But it’s possible the U.S. could increase its capacity enough in a couple of years, Gerlt said.
“It's a multiyear process to build up that capacity,” he explained.
Even though China has agreed to buy 25 million metric tons of soybeans annually over the next three years, growing American crushing capacity may still be needed down the road.
Some worry the trade deal with China might not materialize, leaving farmers in a tight spot once again. "Announcements like these aren't actual sales to China yet," said Holst, the Illinois soybean farmer.
In recent years, China has also become increasingly reliant on South American soybeans — specifically Brazil, the world’s largest exporter of soybeans. This year, the Chinese have bought record amounts of Brazilian soybeans, leaving Ehmke skeptical that China will live up to its promises.
“I think that’s doubtful with Brazil harvesting another record crop and U.S. soybeans being priced out of the market,” Ehmke said. “If the U.S. were to reignite the trade war with China again, then U.S. sales would again come to a complete halt.”
This story was produced in partnership with Harvest Public Media, a collaboration of public media newsrooms in the Midwest and Great Plains. It reports on food systems, agriculture and rural issues.
