Thursday, March 14, 2019

U.S. farmers plan to sow 85 million acres of soybeans this spring, despite failure to sell much of last year's crop

"U.S. farmers are gearing up to plant what could be their third-largest soybean crop ever despite failing to sell a mountain of beans from their last harvest due to a U.S.-China trade war that remains unresolved," Mark Weinraub reports for Reuters. "The U.S. government estimates farmers will have 900 million bushels, or approximately $8 billion, of last year's soybeans in storage silos around the country when they start harvesting the next crop."

Before the trade war, China was the United States' biggest soy customer, buying $12 billion a year; now sales are negligible, despite recent promises from China to buy more as trade talks continue.

So why are farmers planting more soybeans this year? Because it's the best of several poor options, they say. Easy alternatives such as sorghum and corn are also entangled in the trade war, and repeatedly planting corn in the same field requires extra fertilizer and fuel. Farmers are also stuck with expensive specialized equipment for growing, harvesting and storing soybeans. 

"That means farmers will plant soybeans in the hope that the trade war ends, or that they will be compensated by another bailout or crop-insurance schemes," Weinraub reports. "The USDA expects soybean prices will fall in 2019 due to tariffs and rising supply. But soybean futures prices have performed relatively well, considering the disruption to markets from tariffs. The price is up 5.3 percent since China imposed a 25 percent tariff in July. That means many growers have made a slim profit from seeding soybeans."

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