Three Facts Showing China Is Not to Blame for Soybean Farmer Losses

And one fact that points weakly in the other direction.

Image by CJ from Pixabay

It’s been a tough year in the corn belt. Farmers are facing crop prices too low to cover their costs. The Trump administration is planning to send them checks to soften the blows, but payments have been delayed by the government shutdown.

Last month China stopped buying US soybeans. Many in the media have drawn a straight line from this change to the low farm profits. But can we really blame China for the tough times soybean farmers are going through?

Here are 3.5 facts that imply the answer is no and 1.5 facts that suggest yes.

Fact 1: Soybean prices have been declining for 3 years

US soybean production has been flat for a decade. Over the same period, Brazilian production increased by 83%. Brazil now produces 40% of world soybeans and 50% more than the US. This large supply increase means more soybeans for global markets to absorb, so prices have declined.

Low and declining prices started way before last month when China stopped buying US soybeans.

Fact 2: US soybean farmers attained record high yields this year

US soybean farmers are projected to produce 53.5 bushels per acre this year, which is the highest ever. Earlier this year, Brazilian farmers obtained their second highest ever yields. When yields increase, prices have to drop to convince people to buy the extra product. Major crops have inelastic demand, which means that prices typically drop by more than production increases, i.e., farmers often make less money in years they produce a big crop.

Fact 3: Countries other than China also import soybeans

Countries other than China import 40% of the world’s soybeans. The US exports 25% of the world’s soybeans. If China won’t buy US soybeans, then the US can sell to other countries.

Opposing Fact: Brazil prices are now higher than US prices

The price of soybeans at US Gulf export terminals is typically about 8% higher than the price at the port of Paranaguá in Brazil. This difference reflects the lower cost of shipping to China from the Gulf. However, you may have noticed in the first price graph that Brazil prices have increased in 2025, whereas US prices have stayed flat. The US price is now about 5% below the Brazil price. This fact suggests that lack of demand from China suppressed US prices by about 13% through September.

The price gap should return to normal once markets figure out where else to send US soybeans, just as it did in the 2018 trade war. Brazil prices will not stay above US prices.

Bonus mixed fact: Soybean prices mostly did not react to tariff news, except for today

After Trump won the presidential election last year, I noted that “corn and soybean prices have barely moved, implying that agricultural commodity traders see little change for the major agricultural crops.” In April this year after Trump announced the liberation day tariffs, I wrote an article titled “Soybean Markets Yawn at the Tariff War” about the lack of soybean price reaction to what were historically high tariffs. In September, prices dropped about 3% as it became clear China was not buying this year’s crop, but prices reversed those losses in the first part of October.

However, this morning’s markets seem to have noticed the trade war. News reports over the weekend suggested that US and China officials had reached (another) trade agreement that will make soybean farmers “feel very good about what’s going on both for this season and the coming seasons for several years”. Look closely at the plot above and you’ll see prices are up 2.5% today. They are now back to where they were in June and February.

The three facts I presented above paint a big picture that lack of demand from China is not to blame for the struggles of soybean farmers. Nonetheless, the last two facts show that trade negotiations can cause price fluctuations, at least in the short run.

If I were in the soybean business, I would be much more worried about Brazil’s massively increasing supply than China’s demand.

I made the graphs with this R code.