(Yicai) Nov. 10 -- The US Soybean Export Council remains optimistic about its foreign trade business despite the United States exporting zero soybeans to China in the past two months, according to the association's chief executive officer.

The trade dispute between China and the US has posed challenges to US soybean exports to China, but the leaders of the two countries recently met in Busan and discussed topics, including soybeans, Jim Sutter told Yicai in an interview during the China International Import Expo. "I'm very optimistic that our soybean trade is going to start again in the very, very near future."

US soybean exports to the Chinese mainland totaled 22.6 million in the year ended Aug. 31, according to data from the US Department of Agriculture. However, the US did not export any soybeans to China in September.

"For September, [soybean exports] were zero," Sutter said. "It was the first time in nine years that it had been zero, and I am afraid October was also zero, and that would be the first time in 20 years."

The Busan Summit was a turning point for the trade relationship between China and the US, Sutter noted. Despite the uncertainties, the USSEC and 12 other US agricultural commodity associations attended the CIIE this year.

"We wanted the US soy industry to be here at the CIIE regardless, because we're long-term partners with China," he pointed out. "We've seen ups and downs, but this is a relationship, and all relationships have some ups and some downs."

The USSEC has been working in China since 1982, well before China became the world's largest soybean buyer, importing about 60 percent of the global soybean production.

'Weaponizing' Soybeans

The trade tensions have left US farmers very frustrated and disappointed, Sutter told Yicai, confirming that tariffs remain the number one challenge.

"They planted soybeans in spring thinking that China -- our number one market -- would still be a market, and all of a sudden it got sort of shut off because of these tariffs that put the US at a disadvantage versus other origins," Sutter said. "The price went down, which was not a good situation."

When asked whether soybeans had been weaponized in the dispute, Sutter agreed.

"Yes, soybeans have been weaponized, which is too bad because I think soybeans are food, nutrition security, and food security," he noted. "I really find it too bad that something like that gets weaponized."

While confident that soybean trade between the two countries will resume, Sutter explained that the damage was not made to the product's reputation, but to the stability of the trade environment.

"I don't think the trust in US soybeans has been eroded," Sutter pointed out. "I think maybe the trust in the trading relationship has been eroded.

"I think buyers here still believe in US beans, the quality, the sustainability, the reliability, all those things," he added. "But I think there is some question about whether we can count on this open trade relationship."

Sutter then said that the results of the presidential agreements are yet to be seen, and they will be judged based on whether soybean shipments will actually resume.

Mutual Diversification Rather Than Decoupling

Despite the severe situation, Sutter does not believe that it is "structural decoupling." Instead, he believes China and the US are just pursuing logical diversification strategies.

"Just as China has been diversifying its supply sources, the US has been diversifying its market," Sutter said, noting that US soybeans are now exported to 80 countries. So far this year, US exports to destinations outside China rose 40 percent from a year earlier. But this was not enough to offset the impact of the China situation.

"If I were China, I'd be a little worried because they're sourcing so much from Brazil," he pointed out. "I think they will feel happier if they get back to where they have Brazil, Argentina, and the US, all as suppliers."

According to customs data, Brazil exported over 102.2 million tons of soybeans in the first 10 months of this year, 80 percent of which were shipped to China. In September alone, China accounted for 93 percent of the South American country's soybean exports.

However, as Brazilian soybean prices have risen, many Chinese buyers have recently adopted a wait-and-see attitude.

The US market has also absorbed more soybeans, with expanding crush capacity driven by surging demand to produce biodiesel. "That is going to continue."

A 'Healthier' Market Share

Looking ahead, Sutter does not expect the US to reclaim its peak market share in China, which once topped 60 percent. "I don't think we will get back to 60 percent," he noted. "I think we will be 30 percent to 40 percent market share.

"And I think that's healthier for China and healthier for the US, as we don't want to have too large a market share," he added. "We want to be, again, we want to be an important supplier."

In this new, more competitive landscape, the USSEC's goal is to compete on merit, without tariff disadvantages.

"We want open trade to be available with no discrimination against us versus other origins, so that when an importer gets ready to buy, they can decide, looking at the price, looking at the quality, looking at the reliability of the shippers, the sustainability, all of those factors," Sutter said. "That's how they'll decide where to buy from, not because of a tariff situation."

He emphasized that US soybeans retain competitive advantages: "We've got a lot of data, and I could spend the afternoon telling you about why our US soybeans are of higher quality than other soybeans."

The USSEC continues its technology transfer work through the Soy Innovation Center in China's Henan province, in cooperation with Henan University, where it educates industry leaders on best practices.

"We want people to understand the differences and then we want them to prefer our soybeans," Sutter concluded. "We want to be the preferred choice, so when a Chinese buyer gets ready to buy, their first call is to the US. That's what we want."

For now, the US soybean sector is watching to see if diplomatic agreements translate into commercial reality. "We have a period of relief," he pointed out. "We need to build on that."

Editor: Futura Costaglione