U.S. Soybean Exports to China Continue Slide to Just 30% of August Levels

​The U.S. Federal Reserve has reported that, overall, U.S. industrial production has continued to grow thanks to increased manufacturing and mineral outputs, while utilities production has fallen sharply. IHS Markit’s U.S. Services index showed services output falling to a four-month low but staying in growth territory. Lastly, U.S. soybean exports to China have fallen dramatically from stable levels in August, likely due to the implementation of tariffs from China.

• According to the Federal Reserve, U.S. industrial production in December grew 0.3% month-over-month, after rising 0.4% in November. Annually, production output increased 3.8% to 109.9 percent of 2012 industrial output. Manufacturing output and mineral output grew 1.1% and 1.5% during the month, respectively. Utilities output fell 6.3%, as warmer-than-usual temperatures decreased demand for wintertime heating.

• The IHS Markit U.S. Services index fell to a four-month low in January 2019 to 54.2, although services output continues to grow. From December, the January index fell 0.3% from 54.4. Anecdotally, the reading indicates growing services output on the back of stronger new orders and client demand. Generally, U.S. services providers reported a strong degree of confidence for the sector over the next 12 months. However, new export orders and employment growth have been putting downward pressure on the composite result. January’s result was not only a four-month low, but softer compared to the the series trend and average from 2018.

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• According to the USDA, U.S. exports of soybeans have been on a downfall since the Chinese implementation of tariffs in mid-summer 2018. China constitutes 60% of foreign demand for American soybeans. The U.S. was exporting roughly 29 million metric tons of soybeans per week to China from the week of March 22 to the week of August 9, in which it began sliding to a recent low of nine million metric tons during the week of December 20. The Wall Street Journal writes that the tariffs have been taking a major toll on U.S. farmers’ and agricultural producers’ livelihoods. Both countries’ governments are working on a deal to resolve the year-long trade dispute.