Soybeans Still Top China’s U.S. Ag Imports, Even as it Exceeds Corn TRQ

Wendong Zhang, 515-294-2536;
Dermot Hayes, 515-294-6185;
Xi He;
Nathan Cook, Communications, 515-294-3809;

November 24, 2020

ISU researchers project China will top $31 billion in U.S. ag product imports in first year of trade deal

Ames, Iowa – Soybeans will once again top the list of U.S. agricultural exports to China, even as China exceeds its tariff rate quota for corn for the first time since implementing a TRQ system in 1996.

“In November, the World Agricultural Supply and Demand Estimates forecast U.S. soybean production at 4.17 billion bushels, down 98 million bushels due to lower yields in several major producing states including Illinois, Iowa, Indiana, Ohio, and Nebraska,” said Wendong Zhang, an assistant professor of economics at the Center for Agricultural and Rural Development at Iowa State University.

Some of that loss of production was due to a derecho that tore through the Midwest in August. Wind gusts reached 140 mph and flattened crops across both Iowa and Illinois, the two largest soybean-producing states.

However, even with production falling short of estimates, soybeans once again top China’s U.S. agricultural imports. “In the first nine months of the year, soybeans accounted for 31.3% of China’s total agricultural imports from the U.S., so they will remain the single largest export commodity,” Zhang said.

Zhang and his Iowa State colleagues Dermot Hayes and Xi He are the authors of “China’s Agricultural Imports under the Phase One Deal: Is Success Possible?” Zhang, Hayes, and He first authored the report in May and recently updated their estimate of China’s total U.S. agricultural imports under the phase one deal. Using the most recent data, they estimate that China will import just over $31 billion worth of agricultural and related products from the United States in the first year of the deal.

“In August and September, China’s agricultural purchases significantly accelerated, reaching $5.28 billion,” Hayes said. About $2.8 billion worth of those purchases were soybeans, according to Hayes.

Soybeans topping China’s U.S. imports isn’t surprising—as recently as 2016, China was purchasing 25% of the total annual U.S. soybean crop. However, factors other than the phase one deal have led to China accelerating purchases of U.S. corn as well.

According to the Iowa State researchers, China imported 74% of its corn from Ukraine in the first three quarters of 2020, but those purchases may be slowing as Ukraine faces production difficulties. “Ukraine’s corn production is forecast lower this year due to its unfavorable weather conditions and continued poor harvest results,” He said. “USDA’s November WASDE report projects lower corn yield in Ukraine, which could be its lowest since 2012/13—it’s reasonable to infer that China would shift away from Ukraine corn.”

Furthermore, since 2018, China has struggled with an outbreak of African swine fever in its hog production industry. Keeping the infection under control required culling millions of pigs, which led to China increasing both U.S. pork imports to cover the loss in domestic production and U.S. feed grains as it rebuilds its hog industry. “In 2019, animal feed accounted for 70% of China’s corn consumption, with the remaining 30% used for food, seed, and industrial use,” Hayes said.

China’s increased corn needs are reflected in recent data released by China’s General Administration of Customs on November 23, which shows that China imported 7.82 million metric tons of corn from all sources in the first ten months of 2020, exceeding its corn TRQ of 7.2 million metric tons. Furthermore, China has huge U.S. corn orders for delivery in November and December. The researchers also note that, given China’s growing corn needs and export sales commitments, it will greatly exceed its corn TRQ in 2021.

The good news for U.S. farmers is that China’s increased need for corn manifested as $358 million worth of purchases in August and September alone, Zhang said.

Hayes said that this was the first time that China had exceeded its corn TRQ since the system first came into use in 1996, which he said was one of the factors leading to optimism that China will be able to fully meet its $36 billion agricultural obligation under the first year of the phase one deal.