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Coronavirus impact on soybeans limited

Article cover photo
ISA President Tim Bardole is fairly encouraged and confident that COVID-19 is not going to really slow trade for very long and things will get back to normal. (Joseph L. Murphy/Iowa Soybean Association)

By Bethany Baratta, ISA senior writer

Iowa Soybean Association (ISA) President Tim Bardole hoped that the passage of the Phase 1 deal between the United States and China would have sped up China’s purchases of U.S. soybeans. But the new coronavirus, called COVID-19, has dimmed expectations for soybean exports there, at least in the near term.

“In the trade environment we’re in now, where trade has been at a standstill between the United States and China for the past 18 months, any little hiccup in seeing soybean exports carried through the Phase 1 agreement seems more dramatic,” said Bardole, who farms near Rippey.

The outbreak started in Wuhan, China, and has spread internationally, including in the United States. It’s had a ripple effect on the stock market and in businesses worldwide.

The biggest impact has been in China, where 80, 924 cases have been confirmed.

 COVID-19 has, so far, had a somewhat limited impact on soybean exports, said Paul Burke, senior director of U.S. Soy marketing for the U.S. Soy Export Council (USSEC).

According to the USSEC China office, Vessels continue to arrive into the ports where they are being unloaded and processed by the crushers in China. 

For the week ending March 5, the U.S. Department of Agriculture (USDA) reported 139,721 metric tons (5.1 million bushels) of soybean exports to China. It’s somewhat difficult to determine the impact of COVID-19 on soybean exports because of the seasonality of the trade, says Mike Steenhoek, director of the Soy Transportation Coalition.

This is the time of year where Brazil starts its soybean harvest and becomes the leader in soybean exports, Steenhoek noted. The country currently also has a price advantage over the United States.

Adding to that is the impact of African swine fever, which has decimated China’s hog herd, reducing demand for soybeans.

Long-term impact

It’s unknown how long it will take to stop the spread of COVID-19. Burke said vessels continue to be unloaded and soybeans continue to be processed for soybean meal.

“The biggest potential impact at this point is (soybean) oil sales due to the decline of the food service industry,” Burke said.

Al Kluis, managing director of Kluis Commodity Advisors, said 10 to 30% of restaurants in China, Japan and South Korea have closed as a result of the COVID-19 spread and reduced demand in those countries.

 

Business continuity

Travel restrictions have limited face-to-face meetings between industry partners and representatives in COVID-19-affected countries, but rest assured, Burke said, business is still being conducted.

USSEC continues to build business worldwide through its “What It Takes” initiative, which aims to grow U.S. soybean demand worldwide and reduce the United States’ reliance on sales to China.

“Central to this initiative is building on existing relationships abroad and growing our market share while investing in new markets to grow demand in expansion markets and make long-term investments in evolving emerging markets as we plan for the future,” Burke said.

The American Soybean Association, out of an abundance of caution, has canceled its in-person meetings scheduled in Washington, D.C. next week, opting instead for virtual meetings where possible.

Bardole hopes COVID-19 is contained soon, and soybean exports ramp up.

“I’m fairly encouraged and confident that it’s not going to really slow trade for very long and things will get back to normal,” Bardole said.

Contact Bethany Baratta at bbaratta@iasoybeans.com.

For media inquiries, permission to republish articles or to request high-res photos, please contact Katie James, ISA Public Relations Manager at kjames@iasoybeans.com. © 2020 Iowa Soybean Association. All rights reserved.