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Soy Farmers will Require Federal Compensation as a Result of the Trade War with China

05/31/2019

According to the World Agricultural Supply Demand estimate #588 issued on May 10 U.S. farmers will plant 84.6 million acres to soybeans with a projected production of 4,150 million bushels.  Although USDA economists anticipate export of 1,150 million bushels, 38 percent of a total supply of 5,165 million bushels will be priced at a decade-low given the sharp reduction in exports to China.  USDA predicts the average farm price for the 2019 crop to be 810 cents per bushel.  At noon May 22, July futures were 833 cents per bushel with the November 2019 new crop price at 860 cents per bushel. Admittedly corn and soybean prices rose sharply in the second half of May but only in response to late planting and the prospect of lowered yields.

 

It is estimated that production costs is $8.80 per bushel.  In many cases farmers received less than the CME quotation for soybean delivered to local elevators.  Farmers should receive at least $1 per bushel more than current prices to generate any positive income from the 2019 harvest.

 

Following the release two tranches of support in 2018 to a wide range of producers with soy predominating, farmers will receive directly and indirectly about $12 billion in 2019. The White House directed the USDA to work on the new package with funds derived from the Commodity Credit Corporation.

 

For the 2016 election, the President received considerable support from farmers but the fall-out from the prolong trade war with China was not anticipated and has generated concern in Midwest states. Relying on “patriotism” is wearing thin in the corn-belt.

 

The National Farmers Union considered that support programs are “temporary solutions insufficient to address the permanent damage the trade war has inflicted on agricultural export markets.” An Iowa farmer quoted in the May 18th edition of The Wall Street Journal stated, “We don’t want gifts or government money, we just want fair trade.” At this point farmers might settle for any trade, fair or otherwise, to raise prices and regain markets.