The grain harvest is in full swing, but farmers are still trying to figure out how best to market the crop of 2018.
“The guys that I’m working with are focusing on the economics of the soybean crop right now,” says Mick Hoover, a market analyst with Maxyield Cooperative in West Bend, Iowa. “We could definitely see some soy acres go away next year.”
With low prices and the potential for fewer soybean acres next year, some farmers may want to consider a minimum price strategy to protect themselves, he says.
The challenge with soybeans isn’t difficult to find. Hoover says a dramatic reduction in exports to China, coupled with an increase in production, tells the story. He says that since May there has been a 230 million bushel drop in soybean exports, primarily to China.
At the same time, production is up by about 410 million bushels, thanks to increased acreage. That combination explains why soybean prices have dropped in 2018.
“Farmers have done a fabulous job of growing beans,” Hoover says. “There’s not a lot of people questioning why soybeans have dropped.”
The drop in shipments to China is a reaction to the trade war started by President Donald Trump. China has begun buying more agricultural products from Brazil. Hoover cites one source that said China in September imported about 30 percent of its food and ag products from Brazil, with a value of about $3.6 billion. That same month, China imported about 5 percent of its food and ag products from the United States for about $625 million.
Of course, that has meant other countries which had been buying from Brazil have switched to the United States, but the move from being the primary source to the secondary source is reflected in U.S. grain prices, he says.
Hoover says corn farmers might want to take a look at forward pricing some grain for next year. For example, December 2019 corn prices were at $4.02½ last week. That price might make it worthwhile for some producers to lock in a few bushels.