By Jesse Newman and Jacob Bunge 

CHICAGO -- U.S. soybean farmers worked for decades to make China their biggest foreign customer. Now they face a tougher challenge: weaning themselves off the market.

As trade tensions cut deeply into exports, U.S. soybean farmers, industry groups and government officials are seeking a stronger foothold in international markets beyond China, including Europe and Southeast Asia.

"While we've enjoyed the market share, has China become dependent on us or have we become dependent on China?" Agriculture Secretary Sonny Perdue said at an industry event last week. "That's not a healthy economic balance."

A temporary truce struck by Presidents Trump and Xi Jinping at the G-20 Summit in Argentina this month boosted optimism that trade tensions, which have roiled the U.S. Farm Belt, could ease.

The U.S. agreed to postpone planned tariff increases as the two countries begin negotiating other thorny issues.

Soybean futures rose Wednesday after the U.S. Department of Agriculture announced sales to Mexico, as well as 110,000 metric tons of soybeans sold to "unknown destinations," that some in the market believed to be China. This, combined with reports of other purchases by Chinese companies, drove hopes that China would soon be regularly buying soybeans from the U.S.

Despite the truce, farmers and others are working on multiple fronts to secure a home for U.S. soybeans amid the uncertainty: pitching their oilseeds in other countries, trying new varieties for domestic use and planning to switch fields over to corn next spring.

Any such changes, though, present risk and logistical hurdles. Replacing China is a tall order. China last year bought 57% of all U.S. soybeans that were exported, more than eight times the total sold to Mexico, the next-biggest buyer by quantity, according to data from the U.S. Department of Agriculture.

Since the turn of the century, no other country has matched China's purchases of U.S. soybeans. As China imposed retaliatory tariffs on the U.S. oilseed, however, exports to China plunged 62% in the first 10 months of 2018 compared with year-earlier levels.

The U.S. Soybean Export Council, a farmer- and industry-funded group, has launched a project aimed at making up for lost sales to China.

Members of the council in November joined a regional trade exchange in Spain, where they worked to connect U.S. soybean exporters with buyers from the European Union, Middle East and North Africa.

Jim Sutter, the council's chief executive, said, "It's far from a guarantee it will work," adding that trade relationships can take years to build. The group is continuing efforts in China despite the trade interruption, and U.S. farmers are hopeful the market will reopen.

The Trump administration also is trying to sell American crops to a wider range of buyers.

In Washington, the USDA's Foreign Agricultural Service has dispatched Ted McKinney, undersecretary for trade, to Indonesia and South Africa to promote U.S. soybeans since China implemented its tariffs.

Mr. Perdue told farmers recently that the agency is working to open more doors to U.S. soybeans in places like Japan, India and Malaysia.

The USDA will close 2018 with six foreign trade missions, compared with the typical three to four a year. Seven more are scheduled for next year.

USDA officials are pushing other countries to eliminate what the U.S. sees as unjust requirements related to crop quality and safety, which would help break down barriers in some foreign markets, said Greg Ibach, the USDA's undersecretary of agriculture for marketing and regulatory programs.

In July, Ohio-based soybean farmer Bret Davis joined USDA officials on the trip to Indonesia where he toured a food plant, munched on local chips made with soy-based protein, and talked up the protein content and amino-acid balance of American soybeans.

"It's been a hard learning curve right now because of the sharp decline from China," Mr. Davis said.

Pivoting away from China could spell big changes for the U.S. agricultural industry and its infrastructure investments.

China's past demand for soybeans typically translates to four months of heavy sales, packing oilseeds onto trains bound for Pacific Northwest ports, where agricultural companies have built terminals to supply crops to Asian countries.

Diversifying the market for U.S. soybeans around the globe could mean spreading exports more evenly throughout the year, and may direct more crops toward East Coast and Gulf of Mexico ports, soybean-industry officials said.

Some see a chance to sell more soybeans at home. Minnesota-based startup Calyxt Inc. is marketing gene-edited soybean seeds that produce a vegetable oil free of trans fats.

Farmers can collect a premium growing Calyxt's specialty soybeans, and reduce their exposure to China's influence on commodity soybean prices, said Jim Blome, the company's chief executive.

Tregg Cronin, who farms near Gettysburg, S.D., planted about 60% of his soybean acres this year with Calyxt's beans, which he said fetched him a price 25% better than his typical varieties.

"The premium became not only a bonus, but the difference between making money and losing money on our soybean crop," he said.

U.S. farmers aren't giving up on China. "China is so big, no matter what they do we're always going to feel it," Illinois farmer Frank Legner said. "It will be nice to have those other markets to dampen the blow."

--Kirk Maltais in New York contributed to this article.

Write to Jesse Newman at jesse.newman@wsj.com and Jacob Bunge at jacob.bunge@wsj.com

(END) Dow Jones Newswires

December 12, 2018 17:18 ET (22:18 GMT)

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