Kade Grafel, Research Analyst
China had stopped importing soybeans1 from the United States as part of larger trade conflict between the two nations. China is typically a massive buyer of U.S. soybeans, having bought a majority of all U.S. soybean exports in each of the past five years. Over that time, soybean exports to China have ranged from 26.4 million metric tons (MMT) in 2023 to 34.2 MMT in 20202. Roughly 40% to 50% of all soybeans grown in the U.S. are exported each year, meaning that (at least in recent years) China is the destination for 20% to 25% of the entire U.S. soybean crop.
Figure 1 shows the port districts through which soybeans were exported to China in 20233. Around 500 million bushels were exported through the New Orleans district, 263 million were exported through the Columbia-Snake district in Oregon, 110 million were exported through the Seattle district, and 53 million were exported through the Norfolk district. A small portion of soybeans were exported to China through other port districts. In a typical year, around 50% of Chinese soybean purchases are exported through the Louisiana Gulf, 40% through the Pacific Northwest, 5% through Norfolk, and the remaining 5% are exported through various other ports.
Figure 1. Soybean Exports to China by Port District, 2023
Needless to say, a drop in export demand of this magnitude is extremely disruptive to the soybean market. Assuming a fixed quantity of supply (since the decision to plant soybeans was made before any trade disruptions) and a sharp reduction in demand, there will likely be excess supply of U.S. soybeans in the short term. Using the DIS commodity flow methodology, which models the movement of commodities from their point of production to their first point of demand, we can see where this excess supply is likely to be.
This estimated excess supply is shown in Figure 2. The counties with remaining supply are concentrated in the upper Midwest, with some counties in northern Missouri and upstate New York also having some excess supply. Eight counties have an estimated remaining supply of more than 10 million bushels: four are in Illinois, three are in North Dakota, and one is in Minnesota. A total of 345 counties have some supply remaining. Among these counties, the mean supply remaining is around 2.7 million bushels, and the median is around 2.2 million bushels.
Figure 2. Soybean Supply Remaining by County
The estimated excess supply for each state is shown in Figure 3. Thirteen states have some supply remaining, ranging from 243,000 bushels in Pennsylvania to 169 million bushels in Minnesota. Six states have an excess supply greater than 75 million bushels: Illinois, Iowa, Minnesota, North Dakota, South Dakota, and Wisconsin. The share of each state’s total soybean supply remaining varies significantly from 1% in Nebraska and Pennsylvania to nearly 90% in Wisconsin (Figure 4).
Figure 3. Soybean Supply Remaining by State
Figure 4. Percent of Total Soybean Supply Remaining by State
Note that these results are based on a model reflecting a worst case scenario (a 100% reduction of Chinese demand with no substitution). In reality, other foreign buyers would be found for a portion of the excess supply. However, connecting with these alternative markets takes time and effort, and transportation of soybeans originally intended for China to these other markets is likely to be less efficient. Even if all soybeans intended for China are eventually bought, farmers would be made worse off because of these additional costs.