Soybean crops suffering from trade tensions
American farmers take hits from Hurricane Florence and export losses
A rain-damaged soybean harvest in the US Mississippi Delta is heaping more pain on farmers already suffering from damaging trade rows between the US and China that has dragged prices to lows not seen in a decade.
Late-season storms, including bands of showers from Hurricane Florence, soaked ripe soybeans from Memphis, Tennessee, to northern Louisiana over the past two weeks, enhancing mold and fungus growth and causing some beans to rot in their pods, grain traders said.
Now those soybeans do not meet the market’s crop quality guidelines, so farmers that sold soybeans through forward contracts are facing a penalty because they cannot deliver beans with the quality required, they said.
The crop quality woes come as farm income has plunged by half over the past 5 years and as the deepening US-China trade frictions harms demand for soybeans, the most valuable US agricultural export product. China bought $12.3 billion of the $21.5 billion in US soybean exports in 2017.
“The export market is not in a good position to take a lot of the off-grade quality this year because of the issues we’re having without the Chinese (market),” said J.O. Norman, vice president at Oakley Grain in North Little Rock, Arkansas, which operates six elevators in the region.
China halted purchases after slapping 25 percent tariffs on US shipments on July 6. Instead, the country has been drawing nearly all of its soybean needs from Brazil.
Normally, grain elevators which buy, sell and store crops
– and shippers can compensate for damaged soy by blending it with higher-quality beans to meet export specifications that require less than 2 percent damage.
But high-quality beans are in very tight supply in the Delta this year because weak export prices are discouraging Mid- west elevators from shipping them south.
“The damage we’re seeing is only like 3 or 4 percent, which is manageable in a normal year. But we don’t have the export market, so it’s been hard to get good beans,” said a grain buyer at a Mississippi elevator who asked not to be named.
Elevators across the Delta have cut bids for soybeans to discourage a flood of farmer deliveries until demand improves.