China is back in soybean market, but even with that, sales are lagging

Date:12-27-2018

Jim Slosiarek/The Gazette China resumed buying U.S. soybeans in December as part of a trade war truce following a meeting between Chinese President Xi Jinping and Trump, but the amount of purchases remains well behind the pace of previous years.

Illinois farmer Brent Johnson had planned to bump up his corn acreage by 10 percent in 2019 and plant fewer soybeans as a way to shelter himself from the lower soy prices caused by President Donald Trump’s tariff war with China.

But some early winter storms caused him to abandon the late autumn fieldwork necessary to seed the yellow grain in the spring. That will force him and other farmers to devote more of his acreage to soybeans than expected next year.

As soybeans are far more affected by the U.S. trade war with China than corn, the trend adds to economic risk across a U.S. farm belt the Trump administration recently said would get up to $12 billion in aid to make up for trade related losses.

China resumed buying U.S. soybeans in December as part of a trade war truce following a meeting between Chinese President Xi Jinping and Trump, but the amount of purchases remains well behind the pace of previous years.

It is unclear how much U.S. soy China actually will buy with a record Brazilian harvest just weeks away.

Even with China back in the market for the first time in six months, the record soybean supplies littering the countryside have weighed on prices — soy futures were down 8.2 percent so far this year — and made corn a more attractive option to growers.

The severe weather across the Midwest in October and early November meant farmers left nearly 11 million acres of soybeans and corn from Kentucky to North Dakota standing in their fields as of the end of November — the fourth-highest amount ever.

Crops left in the ground during winter can still be harvested once the snow melts but face severe yield loss as soybean pods split and cornstalks are often knocked down, and mold is another risk.

That will further squeeze farm profits after a bleak year of low prices and few buyers.

Analysts are now casting doubt on the U.S. Department of Agriculture’s early November forecast that 2019 corn plantings will rise about 3 million acres to 92.0 million acres.

At that time, soybean acres were seen falling 7.5 percent to 82.5 million.

“Because of what happened during fall tillage ... maybe you do not plant as much corn,” said Don Roose, president of U.S. Commodities in West Des Moines.