Area farmers are sitting on an exceptionally good crop this year. Both soybeans and corn are likely to produce better than previous years.
But prices for both commodities are near their lowest point in half a decade, making a break-even point out of reach for many.
Because of low prices and the lack of on-farm or elevator storage, you are likely to see mountains of grain stored on the ground this harvest season. And the economic impact on communities like De Smet and Lake Preston and other area communities will likely be severe.
The U.S. Department of Agriculture estimates that South Dakota will produce some 277 million bushels of beans this year, up 15 percent from last year.
Paul Casper, a Lake Preston area farmer, said the size of the crop has already negatively impacted price. Commodity prices are generally at their lowest right at harvest time.
Then along came President Donald Trump’s trade war with China.
“My first reaction was ‘crap, another negative impact,’” Casper said.
Trump imposed tariffs on some $200 billion in Chinese goods in an effort to negotiate a better trade deal. China, in turn, imposed up to a 25-percent tariff on beans and some other American products.
That hurt prices, at least in the short term.
“Sixty-five percent of our beans leave South Dakota and the Asian market is absolutely huge for us,” Casper, a past president of the South Dakota Soybean Association said.
Casper said he’s really conflicted by Trump’s actions. He said he needs higher prices for his own livelihood. But, he said, the Chinese have manipulated the market in the past to their benefit.
He said there have been times when the Chinese contracted for a soybean purchase only to back out of the contract at the last moment. When their backing out lowered the price, they would then jump back in and make a purchase.
Casper said that just isn’t right that they do that.
“It will be a pretty stubborn fight between the U.S. and China. The problem is that both of them can go for quite a while” before such trade issues are resolved. But he’s hoping that in the long run Trump’s actions will result in a better market.
Posted on 10-04-2018
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