The disruption at the mouth of the Mississippi is an acute result of the US-China trade war. After US President Donald Trump imposed new tariffs on Chinese goods, Beijing punched back with duties on US exports including most of its $20bn in agricultural commodity sales.
The final 230 miles of the Mississippi river have long reinforced American might in global food markets. Ten grain terminals tower like fortresses along its bends, receiving crops from upstream farms, banking them in concrete silos and sending them over the levees into the holds of foreign ships. Together they can export 500,000 tonnes a day.
Yet this year the autumn high season never came. The amount of grain and oilseeds moving through Mississippi river ports has dropped by 9 per cent since the autumn of 2017, according to the Federal Grain Inspection Service. Buoys for mooring vessels bob unused.
Cargill, the world’s biggest agricultural trading house, repeatedly idled its two terminals on the river, including a five-day shutdown in November when workers stayed home unpaid.
“We’ve never done that [before],” says Jeremy Seyfert, the terminal manager. “We had the ability to take the plant down for five days because we didn’t have anything to load.”
Between September and December, soyabean volumes shipped through Cargill’s river terminals in Louisiana are down 40 per cent year on year, Mr Seyfert says.
Soyabean exports, worth $12bn in 2017, were hit hardest. The oilseed’s conquest of farm fields in the past 20 years has largely been down to US farmers gambling on China’s demand for protein to nourish pigs and chickens. Beijing raised tariffs on soyabeans by 25 percentage points in July, pricing the US crop out of the world’s largest market and making it a symbol of deteriorating bilateral relations.
“As soyabeans have remained the most exposed commodity in the trade war, investors should monitor this market in assessing the state of Sino-US trade negotiation,” says Citigroup.
Soyabean prices depressed by the dispute remain weak, reflecting low expectations even as US and Chinese officials were this week scheduled to resume trade talks. Exporters are focusing their attention on other markets. Soyabean stockpiles are clogged up and down the Mississippi, upsetting rhythms of the crop calendar at a multibillion-dollar cost to American farmers and taxpayers.
Hopes rose in the US farm belt after Mr Trump and President Xi Jinping of China met in Buenos Aires toward the end of last year and agreed not to escalate their dispute for 90 days, a period that ends on March 2. Beijing has in recent weeks purchased a few million tonnes of soyabeans for its government reserve, in a sign of goodwill.
Yet the market is sceptical about the possibility of a permanent detente.
“The reality is that we’re in the early stages of a new cold war,” says Jan Lambregts, global head of financial markets research at Rabobank, a lender to the food and agriculture sector. “China has thrown down the gauntlet: they want to be number one. The US has responded saying that’s not going to happen . . . Within that context, there is no way I can see a lasting deal.”
Even if Beijing and Washington make peace, the effects of the 2018 soyabean showdown will endure. Market veterans recall how a 1973 US embargo on soyabean exports sparked Brazil’s ascent as a major player in the sector. “Once you are branded with the scarlet letter of being an unreliable supplier, it is hard to completely regain those lost sales,” says Scott Irwin, a University of Illinois agricultural economist.
Food security is a priority for Beijing. So uncertainty over US relations may cause it to further diversify its soyabean sources.
“No doubt in my mind, this will have some sort of long-term impact,” says Jim Sutter, chief executive of the US Soybean Export Council, a trade promotion body. “We’re going to do all we can to try and minimise the long-term damage in China, but after the 90-day period is over I don’t think we’ll wake up and go back to normal.”
The council has requested government funding to develop fast-growing alternative markets such as India and Nigeria. “We’re trying to make sure we’re going to new markets, reducing, perhaps, our dependency on a particular large market,” Mr Sutter says.
For the year up to September 30, China imported 94m tonnes of soyabeans, more than a third of it from the US. For the year that began on October 1, US government economists forecast China will import 90m tonnes, the first decline in 15 years.
The US has captured very little of that demand. From September 1 to mid-December US exports of soyabeans to China had amounted to just 341,000 tonnes, compared with 18m tonnes in the same period of 2017, US agriculture department data show. Meanwhile, US farmers have hauled in what is estimated to be a record 125m-tonne crop.
The partial government shutdown over Mr Trump’s proposed border wall has prevented the release of more recent official data on US exports.