Soy­bean crops suf­fer­ing from trade ten­sions

Amer­i­can farm­ers take hits from Hur­ri­cane Florence and ex­port losses

Global Times - Weekend - - BIZ MARKETS -

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.

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