While Successful Farming was reporting this year’s soybean crop will likely set a record — and bring the lowest season-average price in 12 years — Kirk Leeds was sitting in his office at the Iowa Soybean Association in Ankeny, mulling the future of a hallmark Iowa industry. 

Leeds, association CEO, gets to try to make sense of the web of tariffs imposed on U.S. grain as part of a trade war, varying weather worldwide and advance sales by U.S. farmers that will affect this year’s soybean market. When we called to tap his expertise this morning, these were some of his main points:

• China, the top outside market for U.S. soybeans, will likely buy our farmers’ beans this fall, but not as much as usual. (China grows less soybeans than Iowa, and uses most of that for human consumption. It imports whole beans from the U.S., Brazil and elsewhere to grind into animal feed.)

“We could have a record crop,” Leeds said. “We will have lots available at a price that will be difficult for China and others to ignore. We will have sales to South America, including Argentina,” which suffered a drought that reduced its own soybean crop. Brazil will buy U.S. soybeans because it sold its own crop to others and has faced a truck strike and other problems with its own farming. 

• Other countries, including those in Europe, will take advantage of the bargain prices for the U.S. crop and buy.
• Many farmers sold some of this year’s crop in advance, and that will take some of the sting out of the tariff-driven free fall in prices. But those who were already in trouble before this year could struggle. “Some guys and gals will make money. Those that were the most challenged going in will hurt the most.”
• Europe is expected to buy more, given the discount prices. “Will that be enough? At the end of the day, we will be down on exports. It will be a large crop with carryover that will exert downward pressure on the market.”
• The real hurt will come next year, when advance sales won’t be as much of a factor. “The 2019 and beyond story is more concerning. If we can’t resolve this, there will be long-term implications. They will continue to invest in infrastructure in China, and will be looking for alternatives on soybean meal,” such as buying soybeans from countries other than the United States.
• The U.S. is likely to be sitting on the biggest pile of surplus soybeans it has had in years, which could depress prices over the next couple of years or more.
• Farmers continue to use bumper strips on their vehicles that read “trade, not aid” and are likely to be unimpressed by their share of the federal government’s $12 billion aid package intended to offset losses from tariff-related losses in exports. Even a large operation would see less than $15,000 — which isn’t significant in the grand scheme — and many will see even less, Leeds said. “They may be more agitated by the [small] size of the check than they are helped by it,” Leeds said. He’s estimating, because the government hasn’t detailed the program.

Iowa is routinely one of the top soybean producers in the country.