By Matthew Wilde
Progressive Farmer Crops Editor
ORLANDO, Fla. (DTN) — A trade deal with China inching closer to reality has soybean farmers buzzing this week at the nation’s largest commodity event here.
The 2019 Commodity Classic kicked off Wednesday evening. Thousands of farmers nationwide attend the annual four-day event, which features educational seminars and hundreds of companies showcasing the latest crop inputs, equipment and technology.
It is China’s recent announcement to buy 10 million metric tons (367.4 million bushels) of old-crop U.S. soybeans that has farmers excited. Chinese officials said it’s a good-faith gesture as trade talks continue between the nations. President Donald Trump postponed raising tariffs on $200 billion of Chinese goods from 10% to 25% because progress has been made resolving trade issues. This includes a lopsided trade deficit in favor of China and unfair trade practices, including intellectual property theft.
U.S. Soybean Export Council (USSEC) leaders will give a presentation Friday assessing worldwide potential for U.S. soy. USSEC CEO Jim Sutter said farmers would be greatly helped if China honors purchase commitments and a trade deal is struck that possibly leads to more buys.
China previously committed to buy 10 million metric tons of U.S. soybeans this marketing year despite a 25% tariff it slapped on legumes in July as part of trade war retaliatory duties.
“If China follows through what’s on paper at 20 million metric tons (734.8 million bushels), and that’s added to the good exports to other destinations, it could turn out not to be a bad year,” Sutter said. “That gives us more optimism.”
Sutter added a positive export scenario by the end of the marketing year in August is attainable.
“Absent of a deal, I think the current government export figures are fairly accurate,” he said. “If there’s a good deal, they may be way too low.”
The latest USDA forecasts peg soybean exports at nearly 1.9 billion bushels for the 2018-19 marketing year.
USSEC Chairman Derek Haigwood of Newport, Arkansas, said the lack of soybean exports to China shaved $1.50 to $2 off prices. It’s a hot topic at Classic, as it has been since last summer, he said. China purchased nearly 1 billion bushels of U.S. soybeans last year, records show. In 2016-17, the nation bought a record 1.32 billion bushels.
Haigwood said he hopes China’s recent purchases and a trade deal will send prices higher with planting weeks away. May soybeans on the Chicago Board of Trade on Thursday closed at $9.10 per bushel, down nearly 7 cents.
“We’re at crunch time,” Haigwood said. “Do we book ’19 beans? Lock in basis levels? Do we plant more corn, rice, cotton or sorghum?
“There’s still a lot of screen time at Classic for farmers analyzing markets,” he added. “We’re hoping prices go up to lock in and get some security.”
The crop insurance protection price for spring-planted soybeans came in Thursday at $9.54, down 62 cents from a year ago. The corn crop insurance price came in at $4, up 4 cents from a year ago.
SOY EXPORTS SOAR
Even though the trade war and soybean price decline have hurt farmers financially, Sutter said some good things have occurred.
Exports to other nations skyrocketed as Brazil supplied China and U.S. soybeans were affordable as a result.
USSEC held trade events and urged customers in the European Union and other nations to buy more. Sutter said soybean exports are up in nations other than China by 72% to date this marketing year. Whole beans, soybean meal and soybean oil exports are collectively up 55%.
“We’re really pleased with that,” he said.
Just because trade harmony with China could be on the horizon and China has suggested buying an additional $30 billion in U.S. ag products as part of a deal, Sutter said USSEC will work as hard as ever developing new markets.
That includes a strategic plan to invest more checkoff funds in developing or basic markets like India, Nigeria and other countries.
“We’ll work more in nations with high populations that are low in protein consumption,” Sutter said. “We want farmers 20 years from now saying, ‘Farmers back in 2019 were smart investing in places like that.’”
FAITH IN THE FUTURE
Kansas farmer and Kansas Soybean Commission Chairman Kurt Maurath, who’s also attending Classic this week, said he loves USSEC’s plan.
Maurath, of Oakley, recently returned from a trade mission to Vietnam and Japan. He said many countries in Southeast Asia are hungry for U.S. beans.
“Vietnam is importing as much as they can afford,” Maurath said. “The population growth is unbelievable. They need our beans.”
He said the tariffs have hit farmers in the pocketbook. However, he said he believes in the president’s trade strategy with China and other nations and thinks it will pay dividends through increased exports.
“Free trade is what’s best for our country,” Maurath said. “We have to give him the time to get the job done. We just hope it gets done.”
Matt Wilde can be reached at email@example.com
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