Hardiness, perseverance required for farmers in 201911/20/2018 | Soybean Exports, Policy, Soybean News, Economics
By Katie Johnson
Top Iowa State University (ISU) officials suggest farmers should lower their expectations for 2019.
Grain and livestock farmers will again have a tough time making money next year with the United States embroiled in trade disputes with China and other nations, ISU ag experts told farmers at the first of several Pro-Ag Outlook seminars held in Altoona Nov. 9.
The seminars include information on grain prices and global factors to watch, livestock prices and margins and other trends affecting Iowa’s farmers.
“We have to talk trade,” said Chad Hart, ISU associate professor and crop marketing specialist. “That is the issue. That’s what is going to drive where we’ll go next.”
The information shared confirmed what farmers and agriculturalists expected — supplies continue to outweigh demand in the onslaught of continued trade wars, exacerbated by retaliatory tariffs China sanctioned on the United States in July. China’s additional duty on U.S. soybeans is 25 percent.
“Especially for soybeans, trade is huge for the marketplace,” Hart continued. “For the past five or six years, roughly half the crop has been exported to other countries.”
Soybean production increased to keep up with global demand and increased international markets.
“It has been a recipe for success,” Hart said. “Soybeans have been some of the most profitable for farmers.”
That’s no longer the case. Several years of record crops, record inventories and the loss of the world’s top soybean buyer as a customer this year sent prices tumbling about $2 per bushel since February. U.S. soybean imports to China fell 94 percent during the current marketing year, which started Sept. 1, according to the U.S. Department of Agriculture.
“Ninety-six percent of agriculture’s customers live outside the U.S. border,” Hart commented. “Soybean farmers across the country are storing their soybeans until prices — hopefully — turn more profitable through increased demand. If we are going to feed them, we have to trade with them.”
Hart reiterated what 2018 has taught the industry — China is home for U.S. soybeans. The U.S. is looking for the next-best homes now, but there’s not one single market that can replace China, he said.
The U.S. has turned to other partners to recover losses. Mexican exports have increased by 101 percent and the European Union more than doubled their soybean imports. Argentina started purchasing soybeans from the U.S. as well, according to Hart.
“It doesn’t matter which commodity. Overall, U.S. farmers export more than 20 percent of what they produce,” said Hart. “We got into this mess quickly, it’s possible to get out quickly.”
Hart’s sentiment rings true. A few weeks ago, President Donald Trump’s announcement of a planned meeting with Chinese President Xi Jinping was enough to boost the soybean market 30 cents per bushel.
The 2019 outlook for livestock is in a similar situation.
Lee Schulz, an ISU livestock economist, doesn’t expect hog prices to increase much, if at all due to the record hog inventory this year.
“It’s remarkable that prices have stayed where they’re at, given where our inventory is at,” said Schulz.
The soybean industry relies on pork to ensure an abundant domestic demand. When one industry struggles, so does the other, according to Schulz.
“When grains struggle, it lowers feed costs for livestock producers,” he said. “But we are in a situation now where everyone is feeling pain.”
Charles Brown, field specialist in farm management at ISU, encouraged producers to handle financial hardship in a step-by-step process.
“Record keeping will be key,” he said.
Brown added farmers should know their assets, capital gains, cost of production, sale prices and other considerations in preparing to talk with lenders.
Speakers also presented information for the Iowa Concern Hotline, created in the 1980s to help producers through the farm crisis. The hotline is available 24/7 free of charge and confidential. The hotline can be used for financial, legal or family stress. The number is 1-800-447-1985.
Additional ISU Ag Outlook Seminars will feature more ISU economists and experts throughout the state, varying by location and some including meals.
The rest of the seminars include:
- Cresco – Wednesday at 9:00 a.m., Featherlite Center, Howard County Fairgrounds, 563-547-3001
- Greenfield - Dec. 3 at 9:00 a.m., Warren Cultural Center Auditorium, 641-743-8412
- Iowa City - Dec. 5 at 12:30 p.m., Johnson County Extension Office, 319-337-2145
- Mt. Pleasant - Dec. 6 at 8:00 a.m., Henry County Extension Office, 319-385-8126
- Bloomfield - Dec. 6 at 2:00 p.m., Pioneer Ridge Nature Center, 641-673-5841
- Sheldon - Dec. 12 at 9:00 a.m., Northwest Iowa Community College, Building A, Room 117, 712-957-5045
- Storm Lake - Dec. 12 at 2:00 p.m., Prairie Lakes AEA, 712-732-5056
Speakers, registration fees and meals vary by location.
ISU Extension and Outreach asks that producers RSVP before attending by calling the Extension office number.
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