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How low will soybean markets go?

Article cover photo
ISA district 4 director Jeff Frank said the soybean market has been hit hard. Uncertainty remains. (Photo: Joseph L. Murphy/Iowa Soybean Association)

By Bethany Baratta, ISA senior writer

November soybean prices are edging lower this week following tweets from President Donald Trump threatening to raise tariffs on Chinese products from 10 percent to 25 percent. U.S. and Chinese officials are still expected to meet this week to continue trade negotiations as planned.

But the latest downturn in the soybean market is another hit to U.S. soybean farmers. The November 2019 soybean contract settled at $8.53 per bushel at the CME Group, down from the $10.60 range before the United States put tariffs on Chinese products a year ago.

But just how low will soybean prices go?

That remains to be seen, said Chad Hart, grains market specialist at Iowa State University (ISU).

“The sad part is we know prices can go lower still,” Hart said.

The uncertainty of the passage of the U.S.-Mexico-Canada Agreement (USMCA) and the lingering trade talks with China could help spur more soybean sales, Hart said. But weaker soybean meal demand due to African swine fever combined with abundant soybean supplies weigh on supplies and demand.

“We’ve experienced $2-per-bushel drops, and I don’t think we’re talking about setting up more of those. But if there’s no resolution to these trade deals before harvest, we could see additional pressure to take us into $7 soybeans,” Hart said.

Though a deal with China would help alleviate the reverberations from the retaliatory tariffs, it doesn’t solve the supply issue, said Bill Shipley, ISA district 7 director from Nodaway.

“We have way too many soybean supplies,” Shipley said.

It places greater importance on getting deals like the USMCA done, Shipley said.

“We’re losing too many markets. They need to ratify USMCA and get the China deal worked out,” he said.

The next three weeks are “crucial” in determining just how much soybean supplies will be on the market, Hart said.

“The area that doesn’t get planted to corn, where does it go? Does it get planted to soybeans? The more area that soybeans have to absorb, the more supply pressure builds up on the soybean market. If you have no trade deal plus increased area, that is sort of the worst-case scenario for soybean prices,” Hart said.

 “It’s ugly,” said Jeff Frank, ISA District 4 director in Auburn. “I really don’t know where this market is going to go.”

Frank, who has finished planting his crops, said he’d like to see some certainty in the marketplace.

Marketing decisions

So, what do you do with old-crop and new-crop soybean supplies?

Hart suggests sitting tight for a bit.

“There’s no reason to be aggressive right now for either old crop or new crop soybeans. You might as well wait and see how things change over the next month or so,” he said.

There ought to be better marketing opportunities in the near future, Hart said.

“Let time be your ally as opposed to your adversary right now.”

Contact Bethany Baratta at bbaratta@iasoybeans.com.

 

For media inquiries, please contact Katie Johnson, ISA Public Relations Manager at kjohnson@iasoybeans.com or Aaron Putze, ISA Communications Director at aputze@iasoybeans.com

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