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China Buying Soybeans, But Prices Still Low, Storage in Demand, Farmers Not Able to Invest

Ho ho ho: Reuters reports upcoming Chinese orders of American soybeans may raise their total December buy to over 5 million tons of previously Trump-tariffed U.S. soy:

Chinese importers bought only around 4 million tonnes of U.S. soybeans last December, according to U.S. Department of Agriculture data, but season-to-date sales coming into the month last year were 40 times greater at 20.6 million tonnes, compared to about 515,000 tonnes at the beginning of this month.

If China follows through on all the expected buying, total sales would still be less than a quarter of what they were in late December last year [Hallie Gu and Karl Plume, “China Poised to Buy More U.S. Soybeans: Sources,” Reuters, 2018.12.20].

Resumed Chinese demand won’t make up for the Trump Administration’s unforced error in driving soy producers’ prices down, says ag marketer Chip Nellinger:

“Yes [China buying] is good and we can rally a little more,” says Nellinger. “It’s not something that is going to take us two dollars higher or back to where we were before the tariffs were announced.”

Nellinger says getting back to $12 soybeans is probably only possible with a weather or drought issue this summer [Clinton Griffiths, “$12 Soybeans Unlikely Even with China Back in the Market,” AgWeb, 2018.12.19].

Aberdeen-based mega-co-op Agtegra says it plans to spend $52 million to get more beans out from under tarps and into sixteen new bins at nine locations. Agtegra says it planned for 49 million bushels of beans and got only 41 million but has 40 million bushels in storage now. Boy, $52 million seems like an awful lot to pay to insulate oneself from another Trumper tantrum.

While Agtegra is spending money, uncertainty and low soybean futures are drying up soy processors’ investment pool:

The uncertainty is a turnaround from last year when farmer-owned agricultural cooperatives were building new soybean crushing plants at the fastest rate in two decades after several years of large crops.

U.S. grain merchant Archer Daniels Midland Co set a new record for crush volumes in the third quarter and benefited from strong margins.

But after months of soybean futures prices hovering around 10-year lows due to the lack of Chinese buying, farmers have little room for new ventures.

“There isn’t a lot of extra money out there to invest in something like that,” said John Heisdorffer, an Iowa farmer and chairman of the American Soybean Association [“China Trade War Rattles Investors in New US Soy Processing Plants,” Reuters via VOA, 2018.12.20].

The soy crushers are also having trouble lining up buyers for their livestock feed:

St. Lawrence Soyway’s plant is projected to process soybeans into feed for dairy cows. The livestock industry has also been hit by Chinese tariffs on dairy products and pork, though.

“As those farmers are not doing as well, their ability to buy meal at higher prices is not there,” [CEO Doug] Fisher said [Reuters via VOA, 2018.12.20].

Soybean futures in Chicago closed below $9 on Friday.

15 Comments

  1. jerry 2018-12-23

    Ruh oh, we’re in trouble financially. “WASHINGTON (Reuters) – U.S. President Donald Trump’s Treasury secretary called top U.S. bankers on Sunday amid an ongoing rout on Wall Street and made plans to convene a group of officials known as the “Plunge Protection Team.”

    U.S. stocks have fallen sharply in recent weeks on concerns over slowing economic growth, with the S&P 500 index on pace for its biggest percentage decline in December since the Great Depression.”

    So, is any of this a surprise? 10 years ago, another republican doing the same kind of stupid stuff damned near brought the country down. Just 10 years later, we have the same thing. Bring back Obama.

  2. jerry 2018-12-23

    Bring back President Obama and toss this Russian squirrel to the curb.

    “Trump has promised ‘a long shutdown’ of the US government.
    The accomplishments of a US president’s first year in office can be credited to his predecessor, at least where the economy is concerned. And Donald Trump was handed the best performing economy on the planet. All the tough decisions – to refinance the banks, rescue the car companies and deflate the real-estate bubble – had been made. The stock market was tearing along, setting records almost every week.

    Trump gave this rising balloon extra air with $1tn of tax cuts. It was borrowed money, but no matter. The economy sailed along for another year and the stock market carried on rising. His plan was to win the midterm congressional elections and then persuade the Republican party to give him another $1tn, or as near to it as possible.”

    NOem is guilty of this collapse as well and so here senate cohorts. When they come for our Social Security and Medicare, what will we tell them? Will we tell them that because of their failure to govern, we only have soybeans to eat and lots of them.

  3. Moses6 2018-12-23

    I would give Noem great credit if she can balance the budget with out any fed money.Like rounds need fed money way back when, these people think their fiscal, but take federal money to manage programs and pay low low wages.

  4. Debbo 2018-12-23

    “Soybean crushers.” Is that for oil? Human food? Animal feed? All the above?

    The level of incompetence Orange Imbecile and his Pootiepublican enablers have fallen to is surprising most of us and the world. On every level a federal government operates, this bunch is exhibiting a stunning level of incompetence. They are even making the GWB and Raygun thieves and idiots look marginally competent.

    In the 1970s I never, Ever thought I’d want to tell a bunch of dimwitted Republicans they could learn a lot of good things from Nixon! 🤯🤯🤯

  5. Rorschach 2018-12-24

    Trump is creating chaos in the world, and financial markets are just one facet of that. Nobody should be surprised that Trump is lighting a fire for someone else to put out. That’s what he does. That’s all he does. And golf.

  6. mike from iowa 2018-12-24

    We used crushed soybeans as a supplement in ground ear corn to feed beef cattle. Then we tried distillers grain, the corn byproduct left over after making ethanol.

    Crushed soybean meal prices fluctuated with the bean market and finally got too high to be affordable. Cattle didn’t like the distillers grain as well, but ethanol makers didn’t lace their product with Rumensin or Bovatec (Since 1976, cattle producers have relied on Rumensin to improve feed efficiency and prevent and control coccidiosis). The elevator switched the 2 products from time to time and kept throwing the cattle off feed for several days. And we had plenty of trouble with coccidiosis – bloody scours.

  7. Edwin Arndt 2018-12-24

    Soybean crushers is the term used to refer to the soybean crushing industry.
    When soybeans are crushed the result is meal and oil. The oil can be used for cooking,
    it is used for biodiesel fuel, and there are many industrial uses. (Google soybean oil for more
    info.) The meal is used almost exclusively as a protein supplement to animal feed, mostly for
    cattle, hogs, chickens, and turkeys. Most soybean meal is 44% protein.

  8. mike from iowa 2018-12-24

    Soy oil at one time was sprayed in unloading pits in elevators to help prevent the chance of static spark explosions. It fell out of favor rather quickly for some reason.

  9. jerry 2018-12-24

    −653.17 (2.91%) current markets. No wonder the Munchkin wanted to see if the banks had enough money for the plunge. Keep that government shutdown trump and the republicans. We remember the old days of 2008 very well. Oh course, the day is young, it may come roaring back…

  10. mike from iowa 2018-12-24

    Dow is under 22k today and going down.

    Drumpf has to get the Dow to 49k to match the performance of the market during Obama’s administration with no indicted officials and no jail time.

  11. Debbo 2018-12-24

    Thanks for the info on crushers everyone.

    Orange Obscenity has been a constant failure at everything, only making $ by lying, cheating and stealing. That there’s been no change shouldn’t be a surprise. With no help from the criminal Pootiepublicans, he’s on his way to doing the same to the USA. Democrats are our best and only hope at this time.

  12. mike from iowa 2018-12-24

    Someone told me long ago too many green soybeans cause deer to miscarry fawns. That should make farmers happy if it is true.

  13. MJK 2018-12-25

    Have you read the Farm Bill? It is shocking the money and the people who will get this money. Many, don’t touch the soil. Farmers want fair prices and fair trade for their goods. What happened to supply and demand of goods? None of this is new as far as over-production and surplus. We have become too good at producing surplus because more yields mean more money and subsidies. The bigger you are the better paid you will become. Pres. Trump is a business man and his goal in life has been power and money. He knows nothing about agriculture. We have been here before with agriculture being used as a bargaining tool with other countries; withholding grain and ag products as a form of weaponry. We’ve have had embargos and farm products always have been used in politics to wage a punitive threat. It bothers me because there is no true market anymore.

  14. John 2018-12-30

    The fool South Dakotans voted for pulled the US out of the Trans-Pacific Partnership treaty. The other 11 nations forged ahead without the US. Their new Comprehensive and Progressive TTP is effective today. Aussie & Canadian farmers are celebrating the high tariffs that remain on US producers products.
    Fools will never learn as they continue voting against their own interests.
    https://www.huffingtonpost.com/entry/us-farmers-left-out-in-the-ciold-in-new-11-nation-trade-treaty_us_5c282203e4b0407e90834340

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