PRINCETON, ILLINOIS - Just before farmer Evan Hultine started planting crops in his fields outside Princeton, Illinois last year, he made a risky decision not to grow soybeans.
He was losing money on the crop, subject to tariffs amid the escalating U.S. trade war with China, and back then, there was no relief in sight.
“No beans for us,” he told VOA during an interview on his farm in 2019. “After about three months of the trade war it was pretty clear that the president had long-term goals in mind and at the time, my Dad and I had talked, and we were way more comfortable with our ability to produce high yield corn.”
Fast forward to today, a month after Hultine completed his corn-only harvest, and almost a year after making the decision to skip soybeans, Hultine says he has no regrets, even after enduring one of the wettest years he has ever faced.
“For harvestability in this wet fall, this late fall, corn was a lot easier to handle than trying to get beans out,” he said. “In the end, I’m going to stick with it whether it was the right thing or not.”
WATCH: Back to beans for Illinois farmer
Even though he still has a few months before his tractors are back in the fields for another planting season, this year will be different.“
We’re going to move back to some beans,” he admits. “Now that the market is hanging in the mid-$9 range rather than the upper sevens and lower eights a year ago, I’m much more confident in our ability to be profitable at those prices.”
Those prices for soybeans are influenced by reports the so-called “Phase One” trade agreement between the United States and China will curb tariffs and increase U.S. agriculture exports from current levels, according to U.S. President Donald Trump, up to as much as $40 billion annually.
“It’s helping to support the soybean market,” says Illinois Farm Bureau senior economist Mike Doherty, who adds it might have helped soybean prices reach a peak. “It looks like it’s already been priced in as much as the market is willing to price these things in. You know we’ve been through a lot over these last 12 months … a lot of announcements … so really the market I think is in the wait-and-see mode.”
The Trump administration is hailing the “Phase One” trade war truce between the U.S. and China as a “huge step forward” in establishing a long-term trade relationship between the world's top two economies. Under the agreement, U.S. officials say China is committing to buy $200 billion in additional goods and services over the next two years. Thirty-two-billion dollars of that amount will go to purchases of U.S. agricultural products, including corn and soybeans, of which China is one of the largest buyers.
The potential increase is welcome news for trade war-weary farmers like Hultine. “I’d say definitely overjoyed to hear some positive news on that front, but cautious optimism is the best way to describe my feelings.”
Economist Mike Doherty says Hultine’s caution is well placed.
“There’s doubt out there whether they can reach $40 billion,” he told VOA at Illinois Farm Bureau headquarters in Bloomington. “That would be a big increase because to get to $40 billion, you would have to buy a lot of U.S. soybeans. You’d have to buy such a quantity of soybeans it looks like China would almost have to back off its soybean purchases from Brazil. And it doesn’t seem really likely they want to do that.”
While economists believe China this year will see its slowest economic growth in 30 years — it’s projected to reach 5.9% in 2020, down from 6.1% in 2019 — Doherty says China still needs U.S. crops to support its growing population and expanding middle class.
“That’s what was driving demand before,” he says. “It wasn’t a trade agreement with China, it was simply their … it was the market … it was market supply and demand that was the primary driver of selling U.S. and Illinois soybeans to China, and we’d like to get back to that market driven demand.”
Evan Hultine would also like to get back in business with China, which, as part of the Phase One agreement, should take in more of the corn and soybeans he grows on his farm this year.
But given the uncertainty created by the trade war, he’s not quite ready to bet the farm on it.
“We still know that there is a delicate balance here and China is still China,” Hultine told VOA. “I think it’s going to take some hard evidence before we really shake the stress we have felt from this issue."
A subject Hultine hopes the United States and China can avoid in the future once they finalize a permanent, long-term trade agreement.