OTTUMWA — In many ways, the outbreak of the novel coronavirus has created a rocky start to the year.
Pat Swanson, however, hopes 2020 winds up being very positive for Iowa’s soybean farmers. After two years of losses for Iowa soybean growers, the picture has already improved thanks, in part, to improved trade relations between the United States and China.
Swanson, one of two representatives from the ninth district on the board of the Iowa Soybean Association, does admit the outbreak of the novel COVID-19 coronavirus has created uncertainty in the marketplace. Soybeans continue to be on the move, however, even as the outbreak has created an economic standstill.
“We’re pretty optimistic. We recently had a conference call with Ambassador (Gregg) Dodd, the U.S. trade representative for agriculture. He was pretty optimistic that our trade was continuing and we are able to get products shipped to our customers all over the world,” Swanson said. “Trucks are still going. Ships are still sailing. We’re optimistic things will turn around. It’s just the uncertainty that we’re dealing with about this coronavirus and when we’re going to get it contained.”
Implementation of the trade agreement has been complicated by the spread of COVID-19, with impediments to China’s buying. China has lowered tariffs on a range of U.S. agricultural products, including soybeans (down 2.5 percent). Since March 2, Chinese crushers have been able to apply for tariff exclusions for cumulative retaliatory 301-tariffs levied by the country, exemptions many companies have already been approved for.
Despite the improving trade environment, China will continue to purchase U.S. soybeans based on “market conditions.” Swanson agreed with the overall feeling across the marketplace that patience is needed as the country with second-largest economy continues to recover after being at the epicenter of the coronavirus outbreak.
“We’re still in an uncertain time. The markets seem to react every day to different press conferences and different news,” Swanson said. “The price is definitely lower than it was even a couple weeks ago. We’re watching that closely and hoping that, once we get through this virus, things will improve.”
With food service that accounts for 40 percent and retail that accounts for 30 percent of edible oil consumption, China’s recovery is key to thriving soybean market. Falling demand for soy oil may continue into early spring while soybean meal usage will likely decline until mid-spring.
The good news: both are expected to rebound due to high meat prices, expanding production, hog restocking and overall food service recovery. Swanson, a Wapello County farmer herself, knows one fact that even the coronavirus cannot change.
“Everyone has to eat,” Swanson said. “That’s the good thing about agriculture during this crisis. I think this crisis has brought to the forefront just how important it is to support agriculture around the world. Everyone has to buy food. Everyone has to continue to eat. We’re optimistic that the commodity prices will come back. As farmers, we’re planning on what we’re going to be planting. We’ve got our seed ordered.
“For farmers, it’s business as usual getting ready for the planting season.”
That brings another reason for a bright outlook on the future of soybeans. Current conditions and the long-range forecast suggest a much better season for getting crops in the ground for area farmers.
“We did have a pretty good, mild winter. There’s adequate moisture right now,” Swanson said. “It’d be nice to see a little bit of a slow down in the rain. Definitely no more snow (like last weekend). We’re hoping to see that dry up soon. Our beans did well last year considering how tough it was during planting season. We weren’t able to get anything done in the fall of 2018 going into the planting season of 2019.
“Our cover crops are coming up that we were able to get planted. It’s all setting up for a pretty good spring, which a lot of time equates to a good growing season.”