Soybean storage makes way for another record crop

     The U.S. Department of Agriculture (USDA) Acreage and Grain Stocks report released June 30 said an estimated 963 million bushels of soybeans stored in all positions are up 11 percent nationally from June 1, 2016. This is a result of record acres planted and yields achieved during previous years. In Iowa, however, an estimated 179 million bushels are stored, a 3 percent decrease since this time last year.

     It was expected that stocks would be up nationwide because of the large crop last fall, but Iowans have still moved more soybeans than the national average. According to USDA statistics, 18 percent more soybeans were moved from U.S. storage during the second quarter of 2017 than the same period of time last year. While that number may sound surprising, Iowa State University Economist Chad Hart says it shouldn’t be.

     “It shows continuing strong demand for soybeans,” Hart said. “We’re finding more homes for those bushels so they can be used for livestock feed, biodiesel production or international exports. It’s good to see that demand growth when we’ve got plenty of soybeans to sell.”

     Steady demand would be favorable for Iowa farmers. If weather cooperates, another bin-busting harvest is possible, adding to already large worldwide supplies pressuring prices. Iowa Soybean Association (ISA) Market Development Director Grant Kimberley said increasing strong demand is essential for soybean prices to significantly rebound. July futures dropped about $1.50 per bushel since March 1 and $3 per bushel from a year ago.

     Two upcoming events involving the world’s largest soybean importer will hopefully jumpstart a turnaround, Kimberley said.

     Multiple Chinese soybean buyers and processors plan to sign purchase contracts for a large quantity of U.S. beans, and potentially other commodities, during a ceremony in Des Moines on July 13. The U.S. Soybean Export Council and ISA are coordinating the event. Past purchases during similar signing ceremonies have approached 500 million bushels.

     Several ISA leaders will accompany Gov. Kim Reynolds, along with more than 20 other state agriculture officials, for a historic trade mission to China on July 19-28. It’s the first time all the state’s major commodity and farm groups will travel together to the world’s most populous nation to boost demand for Iowa-grown grains, meat, milk and eggs.

     “The goal of the trip is to continue to solidify relationships to make sure the U.S. is in a position to be the preferred supplier,” Kimberley said. “I believe the Chinese are wanting to show how strong of a trading partner they are with the U.S. and one of the best ways to do that is to continue to make purchases of U.S. agriculture commodities, as evidenced by the buying ceremony that will take place in July.”

     Kimberley also hopes recently appointed U.S. Ambassador to China and former Iowa Governor Terry Branstad will have a positive influence on trading partnerships, especially with the influx of beans expected to hit the market this fall.

     Even if weather conditions aren’t the most favorable, Iowa farmers could still see a large harvest. The Hawkeye state planted their biggest soybean crop in a decade, contributing to record U.S acres for a third consecutive year, according to today’s report.

     ISA leaders and market analysts say profit potential early this year and strong demand spurred soy plantings. The report said Iowa farmers planted 10 million acres of soybeans, up 5.3 percent from a year ago. Nationally, 89.5 million acres went into the ground – 31,000 more than March intentions.

     July soybeans on the Chicago Board of Trade closed 26 cents higher than they opened after the report came out. Prices increased slightly early this week after government soy condition ratings weren’t as favorable as expected, analysts said.

     ISA Board member Chuck White of Spencer hopes the upward price trend continues, echoing Hart’s thoughts on increased demand.

     “Soybeans are being used at a faster pace than expected and that tells you there’s great demand out there,” White said. “The future for demand looks really good, not only in China but across the globe. The world is hungry for protein and it’s coming from high-quality Iowa soybeans. That is really good news for me as an Iowa soybean farmer and for other farmers around the state.”

     Farmers interested in further improving their profitability are encouraged to attend the Planning for Profitability Meetings Series, a program that brings practical marketing and risk management expertise to Iowa farmers.

     ISA partnered with commodity marketing and risk management firms AgWest Commodities and Commodity Risk Management Group to present sound marketing advice and updates on current outlook and market drivers. The remaining meetings will have added value in light of today’s USDA report.

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