Many Oklahoma soybean producers were not subjected to as difficult a growing season as producers further north.
While springtime did see flooding in the northeast portion of the state, much of the growing season was favorable.
Producers further west were subjected to a few dry spells that hampered upper-end yield potential, but few stands were completely lost across the state once they became established.
Prices have not cooperated in a way that could have made this a home-run year for producers. Fundamentals in the market, such as 19,612,633 of prevented plant acres across the U.S., had the potential to push prices higher.
There are more factors at play than just a reduction in acres. Also, take into account the reduction in ending stocks for the current year. The 2019-20 projected ending stocks for the U.S. is 475 million bushels. This is a reduction from 2018-19 of 438 million bushels.
Consider then why prices are at current levels. The current U.S. farm price estimate is $9.00/bu. compared to $8.48/bu. a year ago. Such stark reductions in planted acres and ending stocks would normally garner a larger price movement than 52 cents.
Trade is essential to the U.S. soybean market. Any disruption to trade has the potential to dominate headlines and remove positive news from the market. In the current case, Chinese imports of U.S. soybeans have been reduced by 862 million bushels. This is enough to drop China from a 60% share of U.S. exports of soybeans to an 18% share.
The loss of the Chinese market due to the ongoing trade war is not the whole story. The U.S. has managed to find other trade partners increasing exports by 529 million bushels to the rest of the world. Therefore, the U.S. has seen a net reduction in exports of 333 million bushels.
The question many producers are faced with is when to market the current crop and how will soybeans fit into their rotation in 2020. Price volatility has been relatively low considering the trade war. If much of the 2019 crop had not been lost, prices would have fallen much further.
Currently, soybean prices are near the 52-week marketing channel average price. In this tumultuous year, farmers are still able to capture a year-long average price at harvest. If producers choose to store soybeans after harvest, consider storage cost and basis levels.
If storage costs will be a major burden and basis is good, selling the cash crop and purchasing call options can lengthen the marketing window while reducing the risk of storing unhedged.
It also allows the producer to utilize a majority of the cash value of the crop to cover expenses.
Looking ahead to 2020, explore crop rotations that spread risk across oilseed and feed grain markets. Until a U.S.-China trade deal is finalized and signed, commodities will remain uncertain and price rallies will be suppressed.
Soybeans will continue to be grown across the United States, and producers who are successful will calculate their break-evens and limit production to acres that can cash flow this volatile crop.