For the past several months the soybean market and soybean producers have been fixated on tariffs and ongoing trade negotiations with China, but another major issue is garnering more and more attention and could potentially have a major impact on soybean demand.

“Soybeans are really focused on China, and it’s not necessarily just the trade talks,” said Betsy Jensen, Northland Farm Business Management and a producer/marketer from Stephen, Minn. “It has a lot to do with the African swine virus as well that has taken over China.

“That is making headlines in just about every newspaper,” she continued. “You open up The Wall Street Journal, the New York Times, all the major papers are reporting on what is happening to China’s pig herd. That is a huge issue right now for the U.S.”

It’s a huge issue, she added, because those pigs eat a lot of U.S. soybeans. That, coupled with the ongoing trade negotiations, has the market and producers very concerned.

“I know we’re watching trade negotiations, they are very important, but we need to make sure that China still wants to buy our soybeans,” Jensen said, adding that even if the U.S. and China do come to some agreement on trade, China may not buy as much soybeans because of the African swine virus.

“If they don’t have the pigs they’re not going to want to buy our soybeans, and so do keep an eye on how quickly that (African swine virus) is spreading. That is really a wet blanket on the soybean market at this time,” she added.

China’s hog numbers right now are down approximately to the size they were in 1992.

“That’s how many pigs they’ve had to slaughter. It’s decimated their animal herd and so it really is a huge issue for us and we need to make sure we have those demands,” she said.

“Even more frightening is we need to make sure it stays out of the U.S. as well, because U.S. pigs also eat a lot of soybeans,” she added. “We want to make sure we have a healthy herd, not only for pig farmers, but also for soybean farmers.”

Another factor the soybean market is keeping a close watch on is the weather and planting progress for corn. Cooler, wet weather across many parts of the Midwest and Northern Plains is slowing corn planting progress and that potentially could be bad news for soybeans because every corn acre that doesn’t get planted is assumed by the market to go to soybeans.

“The one piece of good news we have in soybeans, if you want to grasp for it, is that the funds are at a near record short,” she continued. “They have been very aggressive sellers of soybeans and so the hope is that they will need to start buying those back again. But, for right now, they still have a huge short position in soybeans and also soy meal and soy oil, and they are just bearish for the soybean market overall. So what we’re hoping for is that we get something to scare them and get them to start buying instead of selling.”

It may take some sort of a crop problem that would most likely scare the funds into start buying their soybean position back.

“It’s not quite a record short position, but they are very short on the soybean market right now and so we hope this is where the selling is going to end,” she said.

Demand for soybeans is a struggle, according to Jensen, adding that the little bit of a glimmer of hope is that local basis levels are still hanging in there.

“(Basis levels) are still doing well at our local elevators. They haven’t gotten better, but they’re not getting that much worse, so do keep that in mind,” she said. “But there’s probably going to be a lot of soybeans that hit the market this summer and I am nervous about basis. So far we are doing well, but just make sure you’re keeping an eye on soybeans throughout the summer and keeping an eye on the local basis because that could change very quickly.”

Basis levels in the region are around $1.10 to $1.15 under and it’s been hanging in around that level for around three months.

As of April 30, local cash soybean prices at one elevator in west central Minnesota regularly followed in this column were $7.47 a bushel for May and basis was $1.07 under. December 2019 soybean was listed at $7.75 with basis $1.10 under.

“So it’s not real exciting. It has come a long way since last harvest, but it’s not attractive. We usually hope for 60 (cents) under,” Jensen said.

“I still don’t see a whole lot of incentive to be making sales of soybeans at this time,” she continued.

“Don’t get me wrong, there is still some downside potential, but we’ve dropped quite a ways and maybe just hold out, see if we can get a little bit of pop in the market with a weather scare,” she concluded.