Trade war: North Dakota soybean elevators, farmers looking for places to sell crop

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BISMARCK—This time of year, requests are usually rolling in from Pacific Northwest elevators for North Dakota soybeans.

But for the last seven weeks, not a single order has been placed, said North Dakota Soybean Growers Executive Director Nancy Johnson.

The result has been the lowering of cash prices offered by local elevators. And some elevators won't accept soybeans at all, leaving Upper Great Plains growers without a market for the crop in their fields.

Basis is defined as the difference between the local cash price of a commodity and the price of global market futures contracts of the same commodity. These high basis numbers are the result of strained trade relations with China.

Seventy percent of the soybeans grown in North Dakota are exported via the Pacific Northwest. Of those, 99 percent are exported to China, Johnson said.

"Basis is the elevator's way to indicate to farmers if the elevator will take soybeans," said Stephanie Sinner, executive director of the North Dakota Soybean Council.

Traditionally, it costs more for North Dakota elevators to get grain to market than in other soybean producing states.

"However, basis in North Dakota has widened to extreme levels under pressure from the Chinese tariffs," Sinner said.

Typically soybean basis in North Dakota will be a difference of 85 cents to $1 per bushel, though it varies from elevator to elevator. Today farmers are getting anywhere from $1.55 to $2 less per bushel locally compared to the price on the global market.

"This is because the elevators don't have anywhere to sell the soybeans," Sinner said.

In June, 27.4 million bushels of soybeans were being stored off farms at elevators in North Dakota, up 40 percent from 2017, according to the U.S. Department of Agriculture National Agricultural Statistics Service.

Another 44.4 million bushels were still on farms.

With low cash prices being paid, Johnson said producers only have two choices.

"They might be so pressed for cash that they may be trying to sell at those bad prices," she said.

Or they have to store them for later delivery.

"But most aren't set up to store soybeans," Johnson said, and it adds even more to their costs.

If elevators won't take soybeans, North Dakota Agriculture Commissioner Doug Goehring said he suspects more wheat and corn will be hauled in to make room for soybeans in bins.

"Some have talked about alternative storage," he said.

Goehring also thinks the basis is being affected as elevators are trying to shift where they ship the soybeans, having to send it east rather than west.

"I suspect as we get closer to harvest and the Chinese start to run out of soybeans they'll be forced back to the table and they'll be back buying," Goehring said.

Argentina had a smaller crop this year and Goehring said Brazil has sent most of its crop to China.

"The U.S. is the last place that has any amount of soybeans that can feed the global market," he said. "We'll likely get all of the E.U. business this year and Mexico is back in the game."

Goehring said many farmers agree with the Trump administration's attempts at fairer trade provisions but they do want to see resolution soon. He admits it won't be a quick fix, "at least not for soybeans."

An earlier version of this story contained an error. Seventy percent of the soybeans grown in North Dakota are exported via the Pacific Northwest. Of those, 99 percent are exported to China.