November 5, 2003
China's Surge in Soybeans Demand Benefits US' Midwest Farmers
A surge in Chinese demand for soybeans and an improbably average local corn harvest is bringing US' farmers great profit opportunities.
Analysts point to foreign exports in explaining soybeans that are selling locally for about $7.60 a bushel, or $2 more than Minnesota's 2002 average of $5.42, and corn that's selling for about $2.20 a bushel, above last year's state average of $2.15.
"The predominate feature in the market has been the Chinese," said Rick Like of Collins Commodities in Slayton. "China has been buying grain left and right, particularly soybeans."
The burgeoning nation's 1.3 billion residents apparently have an insatiable appetite for soybeans and soybean oil. Though China itself grows soybeans, the republic's crop hasn't been enough to feed the local need. As a result, it stopped issuing permits within the past year that would have allowed its residents to export soybeans elsewhere, Like said.
American farmers are happy to pick up the slack and feed the hungry Chinese with Midwest-grown soybeans and corn. Yesterday's high commodity prices partly reflect China's growing demand.
"Right now, the prices we are seeing locally do show that we are a global market," said Brewster farmer Ron Obermoller, who is also president of the Minnesota Corn Growers Association.
The high prices are especially welcome, where occasional late-summer rains helped spare much of southwest Minnesota from the below-average corn harvest most of the Midwest experienced because of a drought.
"Producers in our area, for the most part, are having a really good year," said Jim Nesseth, regional educator for the University of Minnesota Extension Service's Jackson County office. "Bottom line is we have probably more bushels than most people in most directions."
While corn farmers elsewhere may not break even with high corn prices this year because of low yields, US' corn farmers with average or above-average yields could make money off this year's harvest.
"It's going to be a very profitable year," Like said. "And they need that."
It goes the same for soybean farmers.
Despite an aphid plague that resulted in a below-average soybean harvest in southwest Minnesota, an analysis by a Murray County grain marketing group indicates soybean farmers could be making $24 more per acre than last year, according to David Bau, Murray/Nobles County Extension director.
"The price increase is welcome," Obermoller said. "But nobody's gonna get rich off this." It's unclear how long today's high prices will last.
"I would certainly hope that a lot of the producers have 50 - 70% of their crop sold in the next 30 days," Nesseth said.