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Courtesy Tristin Miller (Facebook)

The logistics of high yields, damaged beans and trade wars

By Ty Higgins, Ohio Ag Net

Farmers will be the first to tell you that things will go your way almost as many times as they don’t. That thought may have never be more true after an ideal growing season and anticipated record corn and soybean yields have turned into a slow and wet harvest, causing some of those high yielding soybeans to succumb to damage caused by insects and disease right before being harvested.

That is presenting challenges on the farm and at the elevator.

“When you have high moisture and high damage you are going to have more challenges throughout the year of keeping quality, so we are trying to get the right beans into the right space so that we can store them for a longer term,” said Don Camden, Regional Commercial Lead for Cargill. “I think that is also going to be an issue for the producer, unfortunately this year, as a lot of beans have found their way to the farm and maybe stored in some unconventional space. People really need to keep an eye on that moisture and damage because this year’s crop is going to be very hard to hold the quality in.”

Camden said most of the beans with damage are coming in from the southern third of Ohio. And those farmers are also hauling in a large share of high quality beans as well.

“It’s kind of interesting to watch because we have beans that are really good quality this year and we have beans that are in the 5 to 10% damage range, with a limited amount that is higher,” Camden said. “We try to put them in the right channels, so with the lower recent export numbers we can handle moisture better than we can handle damage in our system because of drying capabilities.”

On the crush side, according to Camden, the moisture is more of a hurdle because most people in the soy crush industry would have more limited drying capacity and you have to dry the beans to process them. The damage is more of a concern around both meal quality and oil quality and making sure the right specifications are delivered that have been contracted.

Adding insult to injury when it comes to the logistics of a heavy soybean take-in is a loss of major markets due to tariffs and trade wars.

“We are more limited on export channels than we used to be. That pushes beans back up into the system and that has weighed on basis levels this year and in Ohio, specifically, we are probably 30 cents lower on the basis levels than we have been historically,” Camden said. “The futures are also lower so the farmer doesn’t want to move as many beans and we frankly just don’t have as much demand to be able to handle a big export program on the river system. It has presented several challenges for us from a price perspective, logistics, managing quality, and all of those types of things.”

Credit: Kelsey Brodman

Farmers in southwest Ohio like Mike Clark, who farms just south of Dayton, are having the soybean crop of a lifetime. But with that kind of volume comes something else Clark has never seen in his 61 years of farming.

“It’s becoming very difficult to find an elevator that is open for deliveries,” Clark said. “One of them closed for 3 days last week through the weekend, one closed last night and another one first thing this morning. I have never seen anything like that and without the soybean market access in China right now there is no use sending soybeans down to the river with a sizeable basis difference there.”

Clark and nearby farmers are noticing a trend when it comes to soybean quality that will not make that trip to a seldom open elevator any easier.

“If you sprayed a fungicide, the soybeans are alright,” Clark said. “I also do some custom work and I haul for some neighbors and they didn’t spray and they are seeing heavy frogeye and some purpling that is adding 15 to 25% damage. Local elevators won’t take them unless they were around 9 to 10% damage and that was with a dockage of 60 cents to a $1.65, depending on the elevator.”

Because of that, Clark is using two of his storage facilities to isolate some of his neighbor’s heaviest damaged soybeans and blending them with some of the better quality loads to get the damage to a more manageable level.

“I just took a blended load in yesterday and we got in at fewer than 2% damage,” Clark said. “If a farmer doesn’t have additional storage or a way to put the more heavily damaged beans aside, their load is going to be rejected and nobody will be willing to take them.”

Courtesy: Michael Wyrick (Facebook)

As far as marketing his 2018 crop, Clark has all of his beans on HTA (hedge-to-arrive) contracts and waits until January through March to haul out to better utilize some of his labor. He says his frustrations will be about what basis levels will be at that time, especially if the hands of the elevators are still tied do to a lack of global soybean markets.

“I’m still in favor of the tariffs and I am in favor of what we have to do in order to level the playing field with China,” Clark said. “I think we will get some things done on that front and if we don’t get back the 30% market share that we had in China, we will build other markets around the world that will make up not all of that 30%, but a good chunk of it which will still affect market prices.

“It also wouldn’t take much of a weather thing to turn supply and demand around either. We have seen the markets fall quickly and we have seen them go the other way just as fast in years past. We just have to watch and figure and listen and hope that we do our best. It’s just a different world and a changing world and that is just a part of progress.”

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