U.S. soybean growers are carrying out a huge gamble. Instead of selling their crops right away, they are finding out all the containers that can store soybeans, including silos, bins, bags and hoarding them to ensure they are safe and dry.
A good soybean harvest and high tariffs imposed by China on U.S. exports have hit the prices of the crops. Due to trade disputes with the United States and rising tariffs, Chinese importers have turned to Brazil to buy soybean supplies, causing the Chicago Board of Trade (CBOT) soybean prices to fall sharply.
Austin Rincker, who grows corn and soybeans on a farm near Moweaqua, Illinois, said farmers like him are facing a tough sales market. For some farmers, soybeans have nowhere to sell, and there is no choice but to store their soybeans. Rincker said he will pay close attention to the market. “We can store beans into 2020 if we have to. We would like to have the storage freed up by the fall of next year so we can store next year’s crop,” he said.
The United States Department of Agriculture (USDA) estimates that by the end of this year, U.S. soybean stocks will more than double, reaching around 955 million bushels. Illinois is the number one state of soybean production. According to the state soybean association, in 2017, Illinois farmers planted 10.5 million acres of soybeans, with an average yield of 58 bushels per acre and a total production of 611.9 million bushels.
As of the beginning of November, the Illinois Department of Agriculture has received 11.6 million bushels of emergency storage capacity demands (such as bags), almost three times from the same period last year. The demands for temporary storage have increased by 4%, such as structures with waterproof covers.
At the same time, there are many U.S. farmers looking for markets to sell crops, and they want to see some sort of negotiations between the United States and China on current trade disputes. They also have been urging Washington to resolve trade issues with China as soon as possible so as not to lose the biggest market.
Therefore, there is still a great risk in storing soybeans blindly. Although futures trading shows higher prices next year, it may change due to trade negotiations and increased supply. Moreover, the soybeans could go bad easily. Frayne Olson, a crop marketing economist at North Dakota State University, said that if soybeans are stored in a high-humidity temporary facility that does not have the ability to control temperature and humidity (just like the large white silage bags seen on many farms), the soybeans will quickly deteriorate.