With the 2025 soybean harvest now in the rearview mirror, producers are looking to start cashing in on the crop. The ongoing tariff dispute between the U.S. and China makes the outlook uncertain, and bean producers are feeling the pinch everywhere.
While the focus of tariffs has been on the retaliation of foreign nations, producers are seeing impacts on the front end through input costs.
Higher Input Costs Due to Tariffs
Paul Casper is a Lake Preston producer and board member on the American Soybean Association. On a Downtown Sioux Falls Rotary panel discussing agricultural in South Dakota, he discussed tariffs. He said if the tariffs on fertilizer were taken off, it could have a $100-an-acre impact.
“The numbers we’re crunching and trying to figure out what to do. Up at 4:15 this morning because I know that Rollins is going to come out. I wanted to hear what she had to say about the China deal. It’s real. It is absolutely totally real. Everyone, as I sit with my agronomist we’re trying to figure out what to do,” Casper said. “So, if I can average 50-bushel beans, or I can average 200-bushel corn. And with my inputs, and I’m not talking labor. I’m not talking wearing out my machinery. I’m just talking about dollars and cents, black and white, numbers. And if I can get that fertilizer down to $100-150, that is a huge opportunity.”
Casper referenced an interview USDA Secretary Brooke Rollins did with CNBC on the issue Nov. 24. China has agreed to buy 12 million metric tons of U.S. beans by January, but purchases are still far from that mark with about a month to go. The deal also includes a commitment to purchase 25 million metric tons annually over the next three years.
While Casper welcomes the news, he wouldn’t consider the deal a foregone conclusion.
“China will come in and do a massive tenure of purchasing whatever product. Then, about a week before it’s supposed to be delivered, they cancel it. And they’ve been doing this for decades. Nobody ever called them out on it,” Casper said. “So, when they do that, guess what? Now the market tumbles. I’ll send down 25 [cents], down 30 [cents] on beans. Guess what they do then? They go to buy the market. So, they’ve manipulated the market for decades.”
He said he hopes the Trump Administration can get something done.
Tom Kersting, CEO of SD Soybean Processors and High Plains Processing, was also on the panel.
“At the end of the deal, you should not be making deals with people you don’t trust, and nobody trusts China,” Kersting said.
While admitting he’s biased, Kersting said that’s a reason why you should sell value-added products like soybean meal and soybean meats: because there are more countries who want the product so there’s less reliance on one, single trade partner.
While producers like Paul Casper maintain faith in the Trump Administration, he contended it isn’t easy for the industry.
“But I’m still thinking this dealmaker dude has got something up his sleeve. So, I’m kind of betting on the come here. And, you know, I’m 67. I started farming with my dad when I was 18. So, I’ve seen a lot,” Casper said. “I went through the high interest in the 80s and survived that. I went through hail outs. I went through droughts, floods. [I’ve gone through] everything you can imagine, and this is tough. This is a tough one. It’s interesting because it’s almost like you can deal with mother nature a heck of a lot better than you can political.”
However, tariffs haven’t been bad for everyone in the soybean industry. Kersting said they've opened the door for companies like High Plains Processing in Mitchell, SD. He said they’re actually a competitor to China.
“Them not being in the market has not been a bad thing for me,” Kersting said.
He said tariffs have opened some avenues for processing plants to do more business for products like soybean meal.
“These tariffs, or threats of tariffs, have led to a lot of trade deals with countries like Vietnam and Thailand,” Kersting said. “Tariffs get a big knock here lately, but they’ve actually led to some very positive things in the marketplace for us and for soybean products.”
Despite some concern from producers, policy leaders in Washington D.C. maintain faith in China’s commitment to purchase the crop. In the CNBC interview, Secretary Rollins said producers can expect an announcement “in the next week or two” on the issue.
China purchases of the majority of U.S. soybeans, taking in about 50-60% of the crop in past years. And while the U.S. is largely reliant on Chinese markets, China isn’t largely reliant on the U.S. for the product.
U.S. Competitors Fill Gaps
In the meantime, China has opted into purchases from Brazil, the U.S.’s biggest agricultural competitor. Brazilian soybean exports have been growing over the past two decades. According to a University of Illinois statistical analysis, the United States “has failed to capture the growth in global soybean demand due to Chinese imports which has mainly gone to Brazil.”
During the last Chinese-U.S. trade war, Brazil has been the beneficiary due to China looking towards South American markets.
Responding to a question from the audience, producer Paul Casper said it’s no surprise to him that Brazil’s soybean industry has grown as much as it has. He referenced a 2015 trip he took to the country.
“I saw some of the most productive ground. I saw fields that were 2,000-acre fields. And I said to my wife, ‘If these cats ever figure out how to move their product, we are screwed.’ And that’s exactly what I said to her,” Casper said. “I said, ‘Well, they got clay roads. So, the infrastructure is just pathetic. They’re trying to move stuff up and down the river to get to a port. They don’t have major ports to load it out. They don’t have a rail.”
He said that was before China looked to Brazil for the crop.
“Guess what? China comes in. And guess what they do? They build ports. Guess what else they do? They dredge the river. And guess what else they do? They build the doggone railroads. So, China’s set this up from the very beginning,” Casper said. “And I said this 25 years ago that nobody manipulates the market more than China. They have to feed those people, and they’ll do everything they can to do that.”
Casper believes China’s “billions of dollars” created the Brazilian infrastructure.
Tom Kersting, CEO of SD Soybean Processors and High Plains Processing, pointed to both Brazilian and Argentinian investments in processing.
“Argentina is the number one soybean meal exporter in the world, and they’ve got their tax structure set up so it incentivizes, I don’t know why we don’t in the U.S., incentivizes the processors,” Kersting said. “They’re a major competitor for us in the global soybean meal export markets. Brazil continues to grow at breakneck speeds.”
However, he said protein demand is growing globally, and that’s big for processing.
“You know, now prices are cheap, soybean meal is going everywhere. People are feeding chickens across the globe, pork across the globe, aquaculture is growing by leaps and bounds,” Kersting said. “So, we need it. It’s going up. Protein demand is fantastic.”
