Panelists discuss trade in inaugural ISA video cast

     Trade was the topic for The State of Soy, a videocast produced by the Iowa Soybean Association (ISA) that streamed its inaugural program Jan. 23.

     Moderated by Aaron Putze, ISA director of communications and external relations, the program featured three panelists answering Putze’s questions and discussing issues affecting Iowa’s soybean farmers.

     “We can think of no topic more important than, you guessed it, trade,” Putze said in introducting the program. “For almost nine months now, a dispute between the US and China, our largest customer, has festered. U.S. soybean sales to China are off more than 90 percent.”

     The panelists included Lindsay Greiner, who farms near Keota and is president of the ISA. Putze called on Greiner first, asking him how the trade dispute has affected his farm.

     “It has impacted our farming a couple of ways,” Greiner responded. “It has impacted soybean prices, of course. We’re looking at about two dollars a bushel less for soybeans this year than we were a year ago.

     He added that trade was not entirely at fault.

     “You can’t blame that all on a trade war,” Greiner said. “You can blame part of it on, we just grew the largest soybean crop in the history of U.S. agriculture.”

     Matt Campbell, risk management consultant for INTL FCStone, a financial services organization, agreed with Greiner about the supply.

     “It starts with overproduction,” Campbell said. “You need to start the process of curtailing some acreage. That’s really where we are heading in 2019.

     “Ironically the timing is good, because we could use some extra corn acres right now, so shifting 4 million acres of soybean into corn is probably not just an option, it really needs to take place.”

     Kirk Leeds, Chief Executive Officer for the ISA who has made more than 20 trips to China, said he expects the impacts of the trade dispute, regardless of how it ends, to linger.

     “The long-term consequences of the current trade dispute are what concern me more than the short-term variances we’re seeing in the marketplace,” Leeds said.

     “I think the days of us selling 30 to 34 million metric tons of soybeans from the U.S. to China are over. I personally believe if we can get 50 to 60 percent of this market back over time, that’s probably as good as it’s going to get. I don’t think the Chinese are going to allow themselves to be this dependent on the U.S. South America is going to continue to ramp up, other places in the world are going to ramp up soybean production.

     “So in the long term, is it bad for the U.S. to be less dependent on China for the demand for soybeans? Probably not, but it’s going to be a painful adjustment.”

     The panelists also discussed alternatives to exports to China, including finding new customers worldwide and new uses for soybean products.

     “The reality is, we have a lot of work to do if we are going to replace the largest customer of soybeans in the world,” Leeds said.

     Greiner said there have been some positive signs for new markets.

     “We’re selling a lot of soybeans to European Union, to the Middle East, to northern Africa,” Greiner said. “I think Egypt is a true success story.”

     Campbell added: “Oddly enough, the number one destination for soybeans in the first four months of the marketing year has been the third-largest producer of soybeans, Argentina.

     “Europe is another big customer. We’re seeing a lot of abnormal, atypical destinations. Brazil has basically priced itself out of the rest-of-the-world market, so we’re able to step in and be the cheapest supplier for all those other countries.”

     Leeds said that although other domestic markets are being explored, such as soybean meal for aquaculture, exports are the key to profitability for soybean farmers.

     “We will look domestically, certainly, but I think we’re going to continue to be dependent on exports for a long time,” Leeds said. “The world wants more protein, and it wants more vegetable oil, the two things you get from soybeans.”

     While there wasn’t much optimism for a quick ending to the trade dispute with China – Leeds gave it a “3” on a scale of 10 for it to end by March 1 – there was optimism expressed.

     “Farming is a business of ups and downs,” Greiner said. “We’re going to make it through this; we’re going to be fine.”