Soybeans across Iowa are disappearing from storage bins to make way for another record crop expected to be harvested this fall. Iowa farmers have planted 5% more acres to soybeans in 2017 than in 2016, USDA’s latest survey shows.
USDA’s annual Planted Acreage report along with the government’s quarterly Grain Stocks report were both released June 30. Both are based on surveys taken in early June. An estimated 963 million bushels of soybeans were stored in all positions (on farms and in commercial storage) in the U.S., which is up 11% from a year ago. This increase in supply is a result of record acres planted and good yields achieved the past couple of years.
Iowa has fewer beans in storage this summer
In Iowa, however, the June survey showed an estimated 179 million bushels of soybeans stored, a 3% decrease since this time last year.
It was expected that stocks would be up nationwide because of the large crop last fall, but it was surprising to analysts that Iowa farmers have moved more soybeans out of bins and onto the market than the national average. According to USDA statistics, 18% more soybeans were moved from U.S. storage during the second quarter of 2017 than the same period of time last year. While that number may sound surprising, Iowa State University Extension economist Chad Hart says it shouldn’t be.
“It shows continuing strong demand for soybeans,” Hart says. “We’re finding more homes for those bushels, so they can be used for livestock feed, biodiesel production or international exports. It’s good to see that demand growth when we’ve got plenty of soybeans to sell.”
Another record harvest forecast for 2017
Steady demand would be favorable for Iowa farmers. If weather cooperates this summer, another bin-busting soybean harvest is possible, adding to already large worldwide supplies that are pressuring prices. Grant Kimberley, director of marketing for the Iowa Soybean Association, says increasing strong demand is essential for soybean prices to significantly rebound from their current depression. July futures have dropped about $1.50 per bushel since March 1 and $3 per bushel from a year ago.
Two upcoming events involving the world’s largest soybean importer, China, will, hopefully, jumpstart a turnaround, Kimberley says.
Multiple Chinese soybean buyers and processors plan to sign purchase contracts for a large quantity of U.S. beans, and potentially other commodities, during a ceremony in Des Moines on July 13. The U.S. Soybean Export Council and ISA are coordinating the event. Past purchases during similar signing ceremonies have approached 500 million bushels.
Iowa trade mission to China departs July 19
Also this month, several ISA leaders will accompany Iowa Gov. Kim Reynolds, along with more than 20 other state agriculture officials, for a historic trade mission to China on July 19-28. It’s the first time all the state’s major commodity and farm groups will travel together to the world’s most populous nation to boost demand for Iowa-grown grains, meat, milk and eggs.
“The goal of the trip is to continue to solidify relationships to make sure the U.S. is in a position to be the preferred supplier,” Kimberley says. “I believe the Chinese want to show how strong of a trading partner they are with the U.S., and one of the best ways to do that is to continue to make purchases of U.S. agriculture commodities, as evidenced by the buying ceremony that will take place here in Des Moines in July.”
Kimberley also hopes recently appointed U.S. Ambassador to China and former Iowa Gov. Terry Branstad will have a positive influence on trading partnerships, especially with the influx of beans expected to hit the market this fall.
U.S. soybean acreage in 2017 a record
Even if weather conditions aren’t the most favorable this year, Iowa farmers could still see a large 2017 harvest. Farmers in Iowa have planted the state’s biggest soybean acreage in a decade, contributing to record U.S. acres for a third consecutive year, according to the June 30 USDA planted acreage report.
ISA leaders and market analysts say the outlook for profit potential early this year and strong demand spurred the increase in soy plantings. USDA’s June 30 report says Iowa farmers planted 10 million acres of soybeans in 2017, up 5.3% from a year ago. Nationally, 89.5 million acres went into the ground — which is 31,000 more than were indicated in USDA’s March planting intentions survey.
July soybeans on the Chicago Board of Trade closed 26 cents higher than they opened after the June 30 USDA acreage and grain stocks reports came out. Prices increased slightly last week after the government’s weekly crop condition ratings for soybeans were released, as conditions weren’t as favorable as expected.
Future demand ‘looks really good’
ISA soybean board member Chuck White, farming near Spencer in northwest Iowa, hopes the upward price trend continues, echoing Hart’s thoughts on increased demand.
“Soybeans are being used at a faster pace than expected and that tells you there’s great demand out there,” White says. “The future for demand looks really good, not only in China but across the globe. The world is hungry for protein and it’s coming from high-quality Iowa soybeans. That’s really good news for me as an Iowa soybean farmer and for other farmers around the state.”
Farmers interested in further improving their profitability are encouraged to attend the Planning for Profitability Meetings Series, a program that brings practical marketing and risk management expertise to Iowa farmers. ISA has partnered with commodity marketing and risk management firms AgWest Commodities and Commodity Risk Management Group to present sound marketing advice and updates on current outlook and market drivers. For more information, visit iasoybeans.com