Export-quality soybean amount is ‘way behind’

The going rate for Virginia’s soybeans in the midst of a United States and China trade war that erupted earlier this year is $8.50 per bushel, down from a typical $10. (Photo by Getty Images)

CHESAPEAKE, Va. — Chesapeake Grain Elevator, in a slow and soggy soybean year, has discounted spotted and waterlogged soybeans, sold much of its grains to Perdue and has “maybe” 100,000 export-quality bushels so far available for purchase, Manager Melvin Vinson said.
The going rate for Virginia’s soybeans in the midst of a United States-China trade war is about $8.50 per bushel, down from a typical $10, Vinson said.
“We’re way behind on getting them in, and they have a lot of damage on them,” Vinson said. “We should be winding down this time of year, and we don’t even have half of the harvest in yet.”
China buys one-third of every acre, or 62 percent, of the world’s soybeans and for the 2018-19 marketing year is expected to import 4.2 billion bushels of the grain, according to the American Farm Bureau.
The USDA in 2016-17 projected that U.S. soybean production in its entirety was to be 4,426 million bushels from nearly 83 million acres farmed.
Brazil’s soybean farms that same year encompassed 96.4 million acres.
Information from the USDA and the Virginia Department of Agriculture and Consumer Services shows that Virginia’s soybean growers reported that they intended to plant 30,000 more acres, or around 1.5 million more bushels, than the estimated 26 million domestic and export bushels that they produced during a hot, dry 2017.
China earlier this year announced a 25-percent tariff on American soybeans in response to a March 2018 Trump Administration hike in tariffs for products such as steel and aluminum and has been been usurping supplies from Brazil.
The Latin American nation’s September to December planting season typically occurs around the time that Virginia is wrapping up its harvest and where peak soybean export season occurs in March.
A more recent report claims that Brazil is discussing with China the possibility of exporting processed soybean products and that untraded soybeans have been reported amid deforested Amazon land that is under a soy moratorium.
The Amazon biome is a watershed area through which the world’s largest blackwater river, the Rio Negro, serves as an Amazon tributary.
The region is around two-thirds the size of the United States and features habitats that range from swamps to forests, the World Wildlife Fund reports.
The World Wildlife Fund contends that releasing even a portion of the Amazon’s 90 to 140 billion metric tons of carbon would accelerate climate change significantly.
Yet trees there have on their own been dying faster than new growth can replace them, according to a study in a 2015 edition of Nature.
Some reports suggest that rivers are emitting as much as the trees can store, a May 2017 item in Frontiers notes.
A 2017 Amazon Soy Moratorium case study published by the Population Council indicates that the world’s first voluntary deforestation agreement as of 2015 proved successful in part because a limited number of soy buyers exerted control over soy purchasing and financing and because monitoring and enforcement systems were streamlined and transparent.
Farms violating the moratorium were identified using a satellite and airborne monitoring system.
Major soybean traders committed not to purchase soy grown on lands deforested after July 2006, and the moratorium was in 2015 renewed indefinitely.
Abiove, a Brazilian biodiesel company, in October reported that it has been monitoring biome deforestation since 2006 and that, based on National Space Research Institute information, more than 100,000 acres of savannah under moratorium has produced soybeans that are not yet traded.
Soybean expansion in cleared areas, the company noted, increased from around 4.2 million acres in 2008 to roughly 11.4 million acres 10 years later, in 2018.
The most recent National Space Research Institute report suggests that nearly half of a second Brazilian biome, a dry savannah, has been converted to other uses.
Brazil is an important trade partner in areas such as tourism and transportation, according to the US Chamber of Commerce.
The average farm production costs for soybeans and corn in Brazil and Argentina are about 11 to 28 percent lower than those of the United States and coincide with land and capital costs, but the United States has higher yields per acre, according to the USDA.
Lower shipping costs have in a strong US dollar economy helped America remain competitive in the export market, the USDA reports.
The U.S. soy industry is also researching and patenting soybean varieties that increase soybean production for animal feed, lend themselves to transportation and industrial uses and more.
China in 2015 enacted rigid food safety standards that hold producers and distributors liable for foods that have been mishandled in processing, tainted by pesticides and veterinary drug residues and more.
The main export destinations for U.S. processed soybean products — oilseeds, oilseed meal and vegetable oil — are according to the USDA China, the European Union, Japan, Mexico and Taiwan.
Other mportant markets also include Indonesia, South Korea and Thailand.
Several Latin American countries also import significant quantities of soybean oilseeds, according to the USDA.
Virginia Tech Global Issues Initiative Director David Orden, like other economists, considered a scenario whereby the United States might export soybeans to Brazil because the country experienced excess demand from China.
Exporters might save on tariffs to Brazil, but the change “disrupts traditional trade patterns,” Orden said.
“So all the work that exporters do to build up linkages, they are going to have to build more,” Orden said. “There’ll be some cost involved.”