With the fall harvest under way and a U.S.-China trade war unresolved, Wabash Valley farmers are bracing for losses.
Terry Hayhurst, who grows corn and soybeans on 1,350 acres in southern Vigo County, said Sunday he’s looking at $150,000 less income this year, solely because of lower crop prices.
“And expenses have not adjusted any at all,” he said.
Brad Burbrink, who farms 3,000 acres near Riley with his in-laws, said it’s too soon to say just what the financial impact will be.
“We’re fortunate that we’ve got a lot of on-farm storage in our operation,” he said. “We’re able to put the corn and beans in the grain bin and hold that for a while, but there’s still a lot of grain going to the elevators and we’ve all got to sell grain at some point to pay the bills.”
Soybeans were among the first U.S. products China hit with retaliatory tariffs after President Trump slapped duties on many Chinese-made goods last spring.
China also curtailed purchases of U.S. agriculture products, including soybeans.
But that was before most of this year’s crop was planted and farmers held out hope and optimism throughout the growing season that things would be resolved – and many still do.
But on Saturday, China canceled planned trade talks with U.S. officials. Another round of American tariffs on Chinese products takes effect today and more U.S. goods bound for China will soon be subject to tariffs by that country.
So the tally now stands at $250 billion in Chinese products being subject to U.S. tariffs and $110 billion in U.S. goods, including nearly $14 billion worth of soybeans, covered by Chinese tariffs.
Amid speculation talks won’t resume until after mid-term elections in November, farmers are looking at prices for their products, especially soybeans, that don’t come close to covering the costs of production.
That’s generally considered to be about $9.40 per bushel for beans. However, the closing price Friday on the Chicago Board of Trade was $8.47 for delivery this month and only slightly higher for November delivery. Market uncertainty means farmers get even less at local elevators – about 80 cents per bushel less, Hayhurst said.
“The markets are not available, so they’re not shipping as readily as they would like to,” he said.
A recent development that would be significant in a normal year is barely a hiccup in this year’s overall picture. The U.S. Department of Agriculture last week projected record yields of 181.3 bushels per acre for corn, an increase of 4.7 percent from last year, and 52.8 bushels for beans, a 3.7 percent jump.
The news put additional downward pressure on prices.
China, by way of Argentina
Whatever optimism remains for farmers has been buoyed by reports that Argentina is buying U.S. soybeans to make up for beans sold to China.
“China is still ending up with some U.S. beans but it’s in a roundabout way, “Hayhurst said. “Because of that you’ve got more costs and that shows up as more negative basis to bring prices down.”
Burbrink said, “China’s got to have soybeans … There’s just not enough beans in the world. They’re going to have to take beans from us eventually.”