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Taiwan: A big hit with Iowa soybean farmers

Article cover photo
Tim Bardole of the Iowa Soybean Association signs a letter of intent Monday to signify the purchase of 1.2 billion bushels of soybeans worth $12.5 billion from the U.S. (Photo: Joseph L. Murphy/Iowa Soybean Association)

By Matthew Wilde, ISA senior writer

 

Taiwan agreed to buy Monday what could amount to nearly 25 percent of Iowa’s soybean production.

At a time when soybean farmers need some good news, Iowa Soybean Association (ISA) Market Development Director Grant Kimberley said the nation came through with a “big hit” in the clutch.

Baseball and soybeans have a lot in common this time of year, Kimberley related. With the major league’s postseason starting, harvest is like the playoffs of farming — a time to reap the rewards from a year of hard work.

But with proverbial home run-hitter China on the bench due to the ongoing trade war, Kimberley said the soybean industry needs to make up for more than a billion bushels of potential lost sales.

“We’re going to have to get a lot of singles and manufacture runs to offset losses from China,” Kimberley said. “Taiwan came through with a big hit.”

Taiwan Vegetable Oil Manufacturers Association Chairman Yau-Kuen Hung signed a letter of intent to buy between 118 million to 144 million bushels of U.S. soybeans during the 2018-19 marketing year. Iowa’s soybean production is projected at a record 590.4 million bushels.

ISA President-elect Tim Bardole of Rippey penned the agreement with Hung during a ceremony at the state capital. The maximum value of the purchase is estimated at $1.56 billion. Similar signing ceremonies were also held in Minnesota and Washington, D.C.

Bardole said Taiwan’s commitment to increase soybean purchases by 22 million to 37 million bushels this marketing year — nearly the equivalent of northeast Iowa’s production — couldn’t have come at a better time. Exports to China, the world’s largest buyer, have essentially ceased after the nation placed an extra 25 percent tariff on U.S. soybean imports and other products in retaliation for U.S. duties on Chinese goods.

Bardole said it’s crucial to increase U.S. soybean market share with existing customers and find new ones to move the huge crop.

“It’s been a rough six months as a soybean producer,” he said. “To be able to sign an agreement with Taiwan, which is pledging to buy additional soybeans nearly equal to a crop reporting district, is truly an honor.

“Trade is so important given how much we produce,” Bardole added. “The sales will be reflected in lower ending stocks and hopefully better prices ahead.”

Impending purchases will boost U.S. soybean market share in Taiwan to nearly 90 percent, according to the U.S. Soybean Export Council (USSEC). The value of the increased soybean purchases is estimated at $216 million to $360 million.

Traditionally, Brazil captured about half the market. The ongoing U.S.-China trade dispute has changed the game.

China is buying all the soybeans it can from Brazil. As a result, premiums late last month for its beans were about $2.50 per bushel over the November Chicago Board of Trade contracts for freshly harvested U.S. soybeans.

Eric Huang, director general of the Taipei Economic & Cultural Office, speaks during the letter of intent ceremony Monday at the Iowa State Capitol. Taiwan imported nearly $3.7 billion worth of US farm products in 2017. (Photo: Joseph L. Murphy/Iowa Soybe

Hung said buying more U.S. soy is a way to solidify an already strong relationship between the countries and secure an excellent protein source for Taiwanese consumers at a great price.

“We came to Iowa because it’s such a great state and a stable producer of high-quality soybeans,” Hung said. “The price is quite competitive now.”

Taiwan has participated in 11 Agricultural Trade Goodwill Missions to the U.S. since 1998, which resulted in about 1.2 billion bushels of soybean sales worth an estimated $12.5 billion. The small island nation, with a population of just over 23 million, imported nearly $3.7 billion worth of U.S. farm products in 2017, records show.

About a quarter of the size of Iowa in landmass, Taiwan is the sixth largest market for U.S. soybeans and seventh largest market for U.S. agricultural products, the agreement states.

“Trade has benefited both Taiwan and the U.S. since 1998,” Hung said.

New ballgame

At a recent soybean conference, USSEC’s Paul Burke said the trade dispute with China is shifting purchases and buying habits of other U.S. customers. Taiwan recently purchased bulk soybeans out of the Pacific Northwest (PNW) for the first time in 15 years.

Three Panamax-sized vessels (capable of holding 2.1 million bushels of soybeans each) were purchased, according to reports.

“We’re looking forward to 90 percent market share in Japan, Taiwan and South Korea,” Burke said. “That’s the goal.”

At the soybean conference, a buyer from one of Taiwan’s largest crushers confirmed his company is shifting purchases from Brazil to the United States. Ttet Union Corporation processes a little more than 55 million bushels a year.

Josh Yen Chung-Pu expects 85 percent of the beans will come from the U.S., an increase of 35 percent. And, 65 percent will be shipped in bulk and 35 percent in containers compared to 50/50 in the past.

“We like the high protein content out of the PNW and the price,” Chung-Pu said.

U.S. Rep. Steve King, R-Kiron, accompanied the Taiwanese trade team on farm visits and participated in a similar signing ceremony in the nation’s capital.

He expects the country to follow through on their purchase commitments.

“I’m convinced they won’t fall one bushel short, which is significant to Iowa farmers,” King said.

 

Contact Matthew Wilde at mwilde@iasoybeans.com

For media inquiries, please contact Katie Johnson, ISA Public Relations Manager at kjohnson@iasoybeans.com or Aaron Putze, ISA Communications Director at aputze@iasoybeans.com

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