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A look at the impact of historic soybean market disruptions

The director of the Gardner Agricultural Policy Program at the University of Illinois says even short-term trade disruptions have lasting consequences on soybean markets.

Jonathan Coppess says the 1973 U.S. soybean embargo, which only lasted a few months, is a prime example. 

“Very much a temporary kind of panic move by the Nixon administration because they were worried about inflation.”  He says, “But what it did is, at the time, Japan was our biggest customer for soybeans, and they relied on the U.S. for more than 90% of their soybean needs.”

He tells Brownfield that move can directly be tied to Brazil’s growth in the world soybean market.

“So, what’s Japan do?”  He says, “They go start investing quite a bit of money in Brazilian soybean production.  A few years after that soybean embargo you start to see Brazilian soybean production take off. And now of course, as we all know, they’re the number one exporter of soybeans in the world and our biggest competitor on the world market.”

Coppess says the U.S. – China trade war from the first Trump term also shows the importance of dependability to global trading partners.  

“We’ve seen China really increase both its domestic production as well as its reliance on Brazil.”  He says, “You know, markets lost do not just reappear easily. It’s going to take quite a bit of work and investment just to rebuild confidence in the U.S. situation as a reliable supplier.”

He says any erosion of export demand hurts the profitability of U.S. soybean growers, and in the global market reliability matters just as much as competitiveness.

AUDIO: Jonathan Coppess – University of Illinois