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11/27/2018 11:48:00 AM
Wabash Valley farmers still hoping for U.S.-China trade deal

Dave Taylor, Tribune-Star

Throughout this year’s growing season, farmers held out hope they might see an end to U.S.-China trade tensions by harvest time.

Now, with the harvest complete or nearly so, they’re still waiting, but some see a glimmer of hope.

President Trump and Chinese President Xi Jinping are scheduled to meet during a summit of the world’s leading economic powers Friday and Saturday in Buenos Aires. 

In recent years, China had been the largest buyer of U.S. soybeans – to the tune of more than $12 billion in 2017. But the country has stopped purchasing U.S. beans amid tariffs imposed on a variety of products by Washington and Beijing.

News of the Trump-Xi meeting sent markets higher last week only to see prices decline on Monday.

“It’s funny,” said Vigo County farmer Brad Burbrink. “You watch the market and if there’s a little bit of talk we’ll get a 10- to 20-cent gain if there’s any positive news, but then that news fades and they take it back away.

“If they could get something in place, I think we’d see a pretty big swing in the markets pretty quick.”

Beans closed at $8.62 per bushel Monday on the Chicago Board of Trade, reflecting a one-day drop of more than 18 cents. While the price was above a July low of $8.14 it was well below the year’s high of $10.77 in March.

Prices farmers receive at local elevators are lower because of such factors as the cost of transporting grain to markets, cost and availability of storage and demand.

Chad Wells, owner of Annapolis Grain Co. in Crawford County, Illinois, said that difference, called the basis, was greater this year than he has ever seen. It reached 85- to 90-cents per bushel during peak harvest time and was still more than 50 cents on Monday.

A big reason, Wells said, is that soybeans that would have formerly been shipped to China via West Coast ports ended up at ports on the Gulf of Mexico.

“This is just a mess,” he said.

Still, futures markets hold out hope for higher prices in 2019 and many farmers are opting to store beans.

“We’ve got storage for about two-thirds of our bean and corn crop,” said Terry Hayhurst, also a Vigo County farmer. “We’ll just kind of wait and see what the markets do.”

Burbrink is also storing grain, at least for now.

“But … I think we’re going to have to move some grain before they get the thing resolved.”

Hayhurst describes corn yields as good but beans as merely OK.

“There was a lot of damage in the beans that hurt us pretty bad,” he said. “I’m not sure USDA estimates [for record] soybean harvest production will hold up.

Burbrink and Hayhurst say they have or will apply for federal financial aid under a $12 billion program Trump announced for grain producers impacted by the tariff war.

“That’s going to help the bottom line by putting some money toward the price decrease that we’ve seen,” Burbrink said. “It’s not going to offset how much prices have gone down but it sure is a help.”

Hayhurst said, “We pay taxes so any time we can get some of that tax revenue back … we’re glad to take it.”

Some farms don’t have sufficient space to keep beans until prices rise. The Illinois Department of Agriculture received requests for 11.6 million bushels of emergency storage capacity, such as plastic bags, compared with less than 4 million bushels last year.

It is corn that is generally stored in bags or on the ground under tarps to make room in conventional storage for beans, which are more susceptible to weather damage.

Annapolis Grain Co. has about 1.6 million bushels of corn stored under tarps on outside pads, including a 760,000 bushel pad built in August in anticipation of a record harvest for both corn and beans, according to owner Chad Wells.

Still, farmers in his area don’t appear to have as much need for emergency storage as those in other parts of the state, Wells said.

“For as big as this crop is, I was very well pleased with how things went,” he said.

Loss of the China market was compounded by U.S. farmers starting the 2018 growing season with 700 million metric tons of beans carried over from 2017.

“Ever since the drought of 2012 … we’ve had good crops,” Wells said. “We do need China to come back in and that would kind of give us a boost.”

While the soybean market has been a concern all year, a drop in oil prices and the rising value of the U.S. dollar is now causing some concern for corn because of its use in gasoline.

“Ethanol is non-profitable right now,” Wells said. “It’s kind of hard to export … Ethanol guys are running under water here.”

As for next year, Burbrink expects to stick with a 50-50 rotation of corn and soybeans, hoping for new markets to emerge for U.S. beans to take the place for at least some lost Chinese business.

“They’ve found other places to buy beans in the last three to six months,” he said. “We’ll probably never get back all the market share.”

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• Hancock County feeling tremors over tariffs on soybeans

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Editor, John C. DePrez Jr.; Executive Editor, Carol Rogers; Publishers: IBRC and IAR


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