Robust Soybean Exports Not Enough to Boost Overall Farm Economy

Reuters writer¬†Mark Weinraub reported on Friday that, “Surging soybean exports that helped drive U.S. growth in the third quarter have done little to boost the domestic farm economy, where grain prices are mired well below peaks hit in 2012 and incomes are forecast to be the lowest since 2009.

Abundant supplies of beans after three years of record harvests, with another bumper crop just rolling in, have filled up storage bins and left many farmers little option but to sell.

“And while recent gains in soybean futures have likely allowed some farmers to break even on the crop or even eke out a small gain, depressed corn and wheat prices continue to weigh on overall profitability.”

Mr. Weinraub explained that, “Current soybean prices are likely to be the best that farmers can hope for this marketing year as overseas buyers turn their attention to South America in the coming months when harvest in Brazil and Argentina ramps up.

“‘For soybeans, we are sort of looking at two tales for the marketing year where you have the real enthusiasm for demand in the first half (Sept. 1-Feb. 28) and then you have anticipation of growing supply and a slowdown in the rate of purchases in the second half,’ said Christopher Hurt, professor of agricultural economics at Purdue University in Indiana.

With another record U.S. harvest just rolled in and massive production on its way from South America, low prices are likely to continue to keep farm incomes depressed even with record exports forecast.”

Friday’s article added that, “A 10 percent jump in soybean shipments during the third quarter helped spur the biggest gross domestic product gains in two years, the Commerce Department said on Friday. And the U.S. Agriculture Department is already forecasting a record 2.025 billion bushels of overseas sales for the 2016-17 crop year, 4.6 percent higher than the 2015-16 crop year that ended on Aug. 31.

“But a large portion of U.S. farmers’ profitability stemming from the growing export demand is tied to China, the world’s top buyer whose demands analysts say can be fickle. China is expected to account for about 63 percent of global soybean imports during the current crop year.”

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