DAVENPORT, Iowa (KWQC) – The downturn in China’s economy is causing concern for local farmers trying to sell their soy beans.
China is the biggest soy bean exporter in the world and the fear surrounding their economy is showing a low price for soy beans.
But, there’s also competition overseas that could be driving down the markets, which is worrying local farmers.
“Soybeans right now look very good,” said farmer Robb Ewoldt. Out in his fields, his soy bean plants look very healthy.
“The soybeans have fared very well compared to what the corn was doing,” said Ewoldt.
But in the farm markets, the price of soy beans is not so healthy.
“I think the American farmer does a very good job producing the food and sometimes we can over produce very easily,” he said.
At the lowest right now in Iowa, beans are around $8.50/bushel, about a dollar below the cost of production.
Ewoldt said whenever the price goes down into the single digits, it’s concerning.
“There’s always concern when it’s costing you to go to work everyday,” he said.
China is a key factor in the soy bean market, because they’re the largest bean exporter in the world.
“We’ve really seen a dramatic increase of Chinese buying of U.S. beans the last decade as their economy has strengthened the last decade,” said economist Brian Basting.
He said the demand for soy beans are directly tied to China. Turmoil in their economy is spreading fear across the market for U.S. beans.
“The forward sales to China this year are well below what they were last year,” said Basting.
But it’s not just China’s economic woes that are driving down the price of beans.
“We have other competition,” said Ewoldt. He said South America is taking away business.
“South America is really good at growing soybeans now and their cost of production is a little bit cheaper than ours,” he said.
“There’s more supply from our competition in this case: Brazil and Argentina,” said Basting.
Ewoldt said they hope to see a rebound in the price of beans.
“We had several good years. A lot of people upgraded their equipment and now they need to tighten their belts and just hold on,” said Ewoldt.
But, he said the problem they’re having right now is simple economics of supply and demand.
“We grow too much and we don’t have a enough customers right now,” he said. “We need more customers.”
Basting said it’s hard to estimate how long China’s economic downturn will last. However, the South American supply of soy beans will be with us for quite some time.
He said to expect U.S. soy bean markets to be slow through the end of the year and possibly into the beginning of 2016. He said he believes China will still buy U.S. beans, just in smaller volumes for now.