Farmers, who are trying to make a buck to feed their family, are finding it hard to do for a variety of reasons.

One of the latest issues, which hasn't had time to garner much attention is the problem with 2017 soybeans, which are just not up to snuff. 

It wasn't the fault of any farmer, not his seed, nor his production practices. Instead, Mother Nature provided weather that caused soybeans to fall short on their protein content.

Instead of averaging 35 percent protein, Iowa State University grain quality specialist Charlie Hurburgh says they are averaging 34 percent to 34.5 percent. 

No, farmers will not be docked a few cents at the elevator for each bushel delivered for sale. It is much bigger than that.  While a half percent shortfall in protein content in a miniscule soybean seems insignificant, believe me, it is a big deal.

When soybeans are crushed to separate the oil, the meal and the fiber to go their different directions, processors such as Archer Daniels Midland Co. or Bunge sell meal that is 48 percent protein. That is the global standard which allows livestock feeders to know how to build feed rations. 

Bunge said last week that it and most other soybean processors have shifted to 47 percent protein coming from mills in the eastern Corn Belt and 46.5 percent protein produced by soybean crushing plants in the western Corn Belt. Some independent brokers were even questioning if those levels could be achieved, given the shortfall of protein in raw soybeans.

When the soybean is starting out on the short end of protein, the end user has to feed more soybean meal to achieve the required protein content in the livestock ration. For a nation, such as China, which will purchase upwards of 3.5 billion bushels of soybeans to feed a massive pork and poultry industry, a soybean which is a half percent short of protein is enough to cause its buyers to shift their business elsewhere. That is exactly what has happened.

With U.S. and Brazilian soybeans being offered at a price that would allow cost, insurance and freight to deliver beans for $11.60 per bushel to Shanghai, China has made the switch to South America because of the lower protein content in U.S. beans. China has told suppliers to make about 200 million bushels of soybeans available from South American sources in November, instead of splitting the order with U.S. soybean exporters.

When your biggest and best customer, who has indicated it wants the equivalent of all U.S. soybeans in five more years, makes such a change, it ricochets throughout the market. Basically, it is a loss of a substantial amount of business, and that means more soybeans left over at the end of the marketing year next August. More carryout means a lower price to soybean growers.

But just for the sake of argument, let’s imagine U.S. soybeans were a predictable high quality and desirable to finicky global bean buyers, such as those in China.  And China has ordered 95 million metric tonnes of soybeans for delivery from the Gulf ports at New Orleans. Oh, and by the way, shipment has been ordered on the new larger Panamax freighters handled only by the new Panama Canal.  That is 1,666 shipments to be exact, since they carry just over 2 million bushels each.

Farmers familiar with the Gulf grain terminals near New Orleans will probably utter an expletive.  The U.S. will be losing that business as well, since the larger Panamax vessels have a loaded draft too deep for the channel at New Orleans. And they are too deep in the water to embark for the open Gulf water and the Panama Canal.

The Army Corps of Engineers can certainly deepen the channel to the required 50 feet, but that is going to take lengthy study, and new calculation of the cost-benefit ratio. 

In the meantime those Panamax vessels will haul 3.5 billion bushels of soybeans out of South American ports to Shanghai and the U.S. farmer will suffer again, through no fault of his own. More carryout. A lower soybean price.

And people frequently wonder why farmers are complainers.

Stu Ellis is an observer of the Central Illinois agriculture scene. In addition to his weekly column, you can view his “From The Farm” and “Harvest Heritage” reports on WCIA 3 News.

 

 

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