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ERS forecasts lower soybean production, prices into 2019
 

By KEVIN WALKER

WASHINGTON, D.C. — Soybean growers are facing the prospect of lower prices paid for their product because of Chinese tariffs and other issues, according to the latest Oil Crops Outlook, a monthly report from the USDA's Economic Research Service.

The report, dated Nov. 13, forecast a decline in U.S. soybean production for the 2018/19 season of 90 million bushels, to 4.6 billion. The change is based on a reduction in the national average yield from 53.1 to 52.1 bushels per acre.

“Even with robust soybean sales to other countries, the current lack of sales to China – the top global import market – prompted USDA to lower its forecast of 2018/19 exports (last) month by 160 million bushels to 1.9 billion, versus 2.13 billion for 2017/18,” the report stated.

“So, despite a lower soybean crop estimate and higher domestic crush, the decline in exports raises the forecast of season-ending stocks to 955 million bushels from 885 million (in October).”

According to the report, although low yields are seen for 17 states, Iowa, Illinois and Missouri represent most of the production decline due to persistently wet conditions, which continued to hamper harvest progress in Arkansas, Kansas and Missouri last month. By Nov. 4, growers had completed 83 percent of the soybean harvest, compared to the five-year average of 89 percent.

Wet conditions were apparent in at least parts of Michigan as well, according to grower Matt Stutzman, who farms 3,000 acres of corn, soybeans and wheat in southeastern lower Michigan, in Lenawee County. He's also a spokesman for the Michigan Soybean Assoc.

“I can tell you how things are going in my area,” Stutzman said. “It's not too bad. We were able to get the soybeans out before the weather turned. Twenty to 30 years ago it wasn't unusual to harvest into mid-November, but that isn't the case today.

“We typically store our crop each year, though in (20)15/16 we delivered our crop directly to the elevator. Today, based on cost, our price is low, but recently it was historically high. The low price is affecting the profitability for a lot of farmers.

“I don't know if the price of beans could go much lower before a lot of farmers could go out of business. I'd say most growers aren't feeling that great about their income,” he said.

According to the report, robust U.S. soybean sales abroad to places other than China have not fully made up for the lack of purchases from China. As of Nov. 1, commitments of export sales of U.S. soybeans to China had plummeted by 94 percent compared with last year.

However, some of this gap can be made up later in the season with improved trade to other markets. The report offered a forecast range for the 2018/19 farm price for soybeans, namely $7.60-$9.60. Last year the price for soybeans was $9.30 per bushel, or $342 per metric ton, according to the American Soybean Assoc. (ASA).

If farmers end up getting $8.60 a bushel this season, that would represent a 9.2 percent drop from the previous year's price. Prices for soybeans have been dropping since 2012, when they peaked at $14.40 a bushel, or $529 a metric ton.

Last week, the Associated Press reported as part of a 90-day truce with the United States in their trade dispute, China agreed to eliminate the retaliatory tariffs it had placed on U.S. soybeans, according to the White House, which also said Beijing had agreed to buy an unspecified but “very substantial” amount of agricultural and other products.

“This is the first positive news we've seen after months of downturned prices and halted shipments,” said John Heisdorffer, a farmer in Keota, Iowa, and president of the ASA. “If this suspension of tariff increases leads to a longer-term agreement, it will be extremely positive for the soy industry.”

Kevin Scott, who farms near Valley Springs, S.D., and serves on the ASA, told the AP the news provides hope for farmers who are storing their crops while awaiting better prices. But he cautioned that “it's going to take a little more to move more beans.”

12/12/2018