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Why U.S. Growers Are Betting The Farm On Soybeans Amid China Trade War

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According to Reuters, U.S. farmers are gearing up to plant what could be their third-largest soybean crop ever despite failing to sell a mountain of beans from their last harvest due to a U.S.-China trade war that remains unresolved. Soybeans were the single most valuable U.S. agricultural export crop and until the trade war, China bought $12 billion-worth a year from American farmers. But Chinese tariffs have almost halted the trade, taking the biggest buyer out of the market and leaving farmers with crops they cannot sell. The U.S. government estimates farmers will have 900 million bushels, or approximately $8 billion, of last year’s soybeans in storage silos around the country when they start harvesting the next crop. The U.S. government rolled out a $12 billion farm aid package last year to soften the impact of falling revenue on farmers, an important source of votes for U.S. President Donald Trump. As winter ends and farmers begin planting, they will continue to plant soy despite uncertainty over whether they will be able to sell beans to China later this year. There are simply no better options, farmers say. That means farmers will plant soybeans in the hope that the trade war ends, or that they will be compensated by another bailout or crop insurance schemes. The U.S. Department of Agriculture (USDA) forecasts farmers will sow 85 million acres of the oilseed this spring. That is down just 4.6 percent from last year and would be the third largest U.S. area planted with soybeans.

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And don’t forget about the weather- some flooding going on now in NE right at planting time- May also hurt this year’s harvest- China will always have high demand and will rely on US production because it all can’t come from Brazil...

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Indeed, what choice do they have? All their life, they are on and with farms...

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Private analyst firm sees U.S. 2019 soybean acreage falling... IEG Vantage, formerly known as Informa Economics IEG, projected U.S. 2019 soybean plantings at 85.494 million acres, down from its Feb. 14 forecast of 86.044 million acres.... 

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Going from farmers to welfare recipients.

Well, you get what you vote for. 

 

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The problem with soybeans exported out of Brasil is the transport bottleneck from the higher plateau, where they are grown, down to sea level and the seaports.  There are only a few roads down to sea level.  The drop is substantial and steep, beyond what rail lines can handle.  The crop is taken to port in long lines of hopper trucks, which clog the paltry 2-lane roads, f which there are only a few. So there is a limit to what can be physically shipped out. 

I suspect, but have no data, that Russia has a limit on what it could grow and sell.  Historically the big producers of grains for Russia were Belarus and Ukraine.  Although Ukraine and Russia are still large trading partners, that sticks in the craw of the Ukrainians, who would wish to totally sever ties with Russia  (and probably will).  When that happens, wheat will need to be grown for domestic breads, and soy will take a backseat.  It won't be long before soy becomes a scarcity. 

Does anybody know if soybeans can be converted into ethanol?  I predict ethanol is going to receive a much higher demand level. 

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4 minutes ago, Jan van Eck said:

Does anybody know if soybeans can be converted into ethanol?  I predict ethanol is going to receive a much higher demand level. 

I can't imagine that you could not make ethanol from soybeans. The starch from any seed can be fermented with yeast to yield ethanol. Probably hasn't been done in the past due to getting a better price for it as an export to China? I can only guess as I am not in that business.

Why do you see ethanol demand going up? My understanding is it is not a great motor fuel since it is fairly corrosive to an engine and has about 25% less energy by volume to most blends of gasoline.

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(edited)

12 minutes ago, MUI said:

Why do you see ethanol demand going up? My understanding is it is not a great motor fuel since it is fairly corrosive to an engine and has about 25% less energy by volume to most blends of gasoline.

You have to look at the overall state of US Bridges, currently assessed at a dismal D-  by the US Engineering Association.  That got there in large part due to the massive and pervasive use of road salt, which rots out the steel and the re-bar in concrete, widely used as bridge decking.  Road salt also has a huge individualized cost in auto damage, both tho mechanicals such as brake tubing, and to car bodies.  Pressure is mounting to eliminate use of road salt.  Indeed, Alaska no longer uses any road salt at all; sand is their substitute material for winter traction.

Unfortunately, in the Lower 48 you have these winter storms that include freezing rain and sleet, with lots of ice forming.  So the ice has to be removed somehow.  Ethanol freezes at -110C, and methanol at -96 C.  That implies that spreading ethanol, even diluted, onto road ice will dissolve it into slush, after which it either runs off or goes to slush.  Currently States and towns use salt because it is cheap, but that changes when you factor in the rust results  (most of which is in autos and trucks, and thus the costs are transferred to motorists, not State budgets).  But at some point the voters rebel, and the States go to a combination of alcohol and sand.  Ergo, vast uptick is coming for ethanol, especially considering that the Greenies, a potent political force, recognize that salt use hurts the environment, while ethanol dilutes and effectively has zero impact.  

How much longer can States afford to spend hundreds of millions doing bridge and road repairs, instead of buying alcohol? 

Edited by Jan van Eck
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3 minutes ago, Jan van Eck said:

You have to look at the overall state of US Bridges, currently assessed at a dismal D-  by the US Engineering Association.  That got there in large part due to the massive and pervasive use of road salt, which rots out the steel and the re-bar in concrete, widely used as bridge decking.  Road salt also has a huge individualized cost in auto damage, both tho mechanicals such as brake tubing, and to car bodies.  Pressure is mounting to eliminate use of road salt.  Indeed, Alaska no longer uses any road salt at all; sand is their substitute material for winter traction.

Unfortunately, in the Lower 48 you have these winter storms that include freezing rain and sleet, with lots of ice forming.  So the ice has to be removed somehow.  Ethanol freezes at -110C, and methanol at -96 C.  That implies that spreading ethanol, even diluted, onto road ice will dissolve it into slush, after which it either runs off or goes to slush.  Currently States and towns use salt because it is cheap, but that changes when you factor in the rust results  (most of which is in autos and trucks, and thus the costs are transferred to motorists, not State budgets).  But at some point the voters rebel, and the States go to a combination of alcohol and sand.  Ergo, vast uptick is coming for ethanol, especially considering that the Greenies, a potent political force, recognize that salt use hurts the environment, while ethanol dilutes and effectively has zero impact.  

How much longer can States afford to spend hundreds of millions doing bridge and road repairs, instead of buying alcohol? 

Tell me, Jan, is there a corruption element to salt usage in the States?  Salty contracts, so to speak?

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Fair point, if the economics will work. Ethanol would eventually evaporate or oxidize into vinegar so the greenies can't complain about it. I'm in Texas so we don't see all that ice like y'all do but I can appreciate what all those chlorides do to cars & the steel in concrete and to surface water. 

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11 hours ago, Pavel said:

Indeed, what choice do they have? All their life, they are on and with farms...

They could raise cattle, add more soy oil to diesel, feed the starving around the world, Use soy diesel in their equipment. 

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(edited)

5 hours ago, Jan van Eck said:

The problem with soybeans exported out of Brasil is the transport bottleneck from the higher plateau, where they are grown, down to sea level and the seaports.  There are only a few roads down to sea level.  The drop is substantial and steep, beyond what rail lines can handle.  The crop is taken to port in long lines of hopper trucks, which clog the paltry 2-lane roads, f which there are only a few. So there is a limit to what can be physically shipped out. 

I suspect, but have no data, that Russia has a limit on what it could grow and sell.  Historically the big producers of grains for Russia were Belarus and Ukraine.  Although Ukraine and Russia are still large trading partners, that sticks in the craw of the Ukrainians, who would wish to totally sever ties with Russia  (and probably will).  When that happens, wheat will need to be grown for domestic breads, and soy will take a backseat.  It won't be long before soy becomes a scarcity. 

Does anybody know if soybeans can be converted into ethanol?  I predict ethanol is going to receive a much higher demand level. 

I favor ethanol as the best additive to gasoline and we buy 85% when we can. Unfortunately, our Nissan NV does not approve it but our Town and Country does. 

Uses for soybeans https://ncsoy.org/media-resources/uses-of-soybeans/

We live in the Soybean Capital of the World, Decatur IL.

Image result for soybean capital of the world

Image result for soybean capital of the world

Edited by ronwagn
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5 hours ago, Dan Warnick said:

Tell me, Jan, is there a corruption element to salt usage in the States?  Salty contracts, so to speak?

No.  Or perhaps more accurately, I doubt it.  Most road salt is mined from underneath Lake Huron in Canada.  It goes to US markets by barge via the Erie Canal, into Upstate NY and New England.  But the main supplier is totally huge.  The salt shipments only get screwed up when the Canadian miners go on strike, as they did last Fall, disrupting supplies for this last winter. 

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4 hours ago, MUI said:

Fair point, if the economics will work. Ethanol would eventually evaporate or oxidize into vinegar so the greenies can't complain about it. I'm in Texas so we don't see all that ice like y'all do but I can appreciate what all those chlorides do to cars & the steel in concrete and to surface water. 

It is just fantastic what salt corrosion does to cars.  They get wrecked in five years or less.  Some guys laboriously paint the undersides with Rustoleum or zinc chromate.  Every part I install underneath gets elaborately pre-painted.  You even have to put a light coat of spray paint on the threads of parts of the suspension to keep them from rusting solid  (and grease before installation, to build up a film barrier.  I have an entire muffler bracket that is now non-existent, all gone in two winters.  Amazing. 

Along the Interstate 80 in Pennsylvania in the winter you see these herds of deer, at least one deer every hundred yards, standing in the shoulder licking the pavement at the right lane stripe.  They are doing a "salt lick," ad the motorists just whizz on by, doing a steady 80.  And no surprise, every quarter mile there is a mangled deer carcass, where the spacing got too slim.  The car?  That gets exported to Japan to be remade into new Toyotas.  Total deer road kill in PA each year:   1.25 million deer.  The cars take a serious beating also.. Does anybody slow down?  Nope.  Might as well be the Autobahn. Welcome to America. 

There was a hockey arena up here where the top of the arena was built as a two-level parkig garage.  The architects forgot about the salt in the ice lumps hanging off the wheeel wells.  That stuff melted in the garage levels and rotted out the concrete. Only 25 years old, pieces of the garage floow would fall out ontothe fans below.  The garage had to be shut down, the inspectors reported it was destroyed by road salt dripping off the cars, and the building had to be torn down.  Oh, well. 

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5 hours ago, MUI said:

I can't imagine that you could not make ethanol from soybeans. The starch from any seed can be fermented with yeast to yield ethanol. Probably hasn't been done in the past due to getting a better price for it as an export to China? I can only guess as I am not in that business.

Why do you see ethanol demand going up? My understanding is it is not a great motor fuel since it is fairly corrosive to an engine and has about 25% less energy by volume to most blends of gasoline.

It is normally used for soy diesel and superior motor oil, which many use. Apparently not corrosive when processed correctly. 

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(edited)

24 minutes ago, Jan van Eck said:

It is just fantastic what salt corrosion does to cars.  They get wrecked in five years or less.  Some guys laboriously paint the undersides with Rustoleum or zinc chromate.  Every part I install underneath gets elaborately pre-painted.  You even have to put a light coat of spray paint on the threads of parts of the suspension to keep them from rusting solid  (and grease before installation, to build up a film barrier.  I have an entire muffler bracket that is now non-existent, all gone in two winters.  Amazing. 

Along the Interstate 80 in Pennsylvania in the winter you see these herds of deer, at least one deer every hundred yards, standing in the shoulder licking the pavement at the right lane stripe.  They are doing a "salt lick," ad the motorists just whizz on by, doing a steady 80.  And no surprise, every quarter mile there is a mangled deer carcass, where the spacing got too slim.  The car?  That gets exported to Japan to be remade into new Toyotas.  Total deer road kill in PA each year:   1.25 million deer.  The cars take a serious beating also.. Does anybody slow down?  Nope.  Might as well be the Autobahn. Welcome to America. 

There was a hockey arena up here where the top of the arena was built as a two-level parkig garage.  The architects forgot about the salt in the ice lumps hanging off the wheeel wells.  That stuff melted in the garage levels and rotted out the concrete. Only 25 years old, pieces of the garage floow would fall out ontothe fans below.  The garage had to be shut down, the inspectors reported it was destroyed by road salt dripping off the cars, and the building had to be torn down.  Oh, well. 

My wife could have been killed by a chunk of concrete that hit right in front of her from a bridge on the interstate and fortunately bounced off my van windshield. She was showered with safety glass pieces, however. 

Edited by ronwagn
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(edited)

3 hours ago, ronwagn said:

It is normally used for soy diesel and superior motor oil, which many use. Apparently not corrosive when processed correctly. 

Ron, I cannot disagree with the use for the oil. I am not in the business of processing soybeans into anything but I can only guess that once the oil is pressed out of the beans the only economical product left behind is starch? Or at least mainly starch? This starch should then be easily converted into ethanol and CO2 by our yeasty friends in the microbial world or used as feed for livestock.

The corrosive qualities of ethanol come into play when you introduce it to an engine. Ethanol is bad for all the rubber seals in the fuel delivery system and for the metal components of the engine itself. Special precautions have to be taken in order to avoid damage to engines when ethanol is used as a fuel. 

 

R2020

Edited by MUI
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3 hours ago, ronwagn said:

My wife could have been killed by a chunk of concrete that hit right in front of her from a bridge on the interstate and fortunately bounced off my van windshield. She was showered with safety glass pieces, however. 

I am glad that your wife was not hurt in this incident! Scary, at the very least for all involved. Hopefully only cost you a windshield and a new pair of drawers!

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43 minutes ago, MUI said:

Ron, I cannot disagree with the use for the oil. I am not in the business of processing soybeans into anything but I can only guess that once the oil is pressed out of the beans the only economical product left behind is starch? Or at least mainly starch? This starch should then be easily converted into ethanol and CO2 by our yeasty friends in the microbial world or used as feed for livestock.

The corrosive qualities of ethanol come into play when you introduce it to an engine. Ethanol is bad for all the rubber seals in the fuel delivery system and for the metal components of the engine itself. Special precautions have to be taken in order to avoid damage to engines when ethanol is used as a fuel.  

 

R2020

 

Some engines are prepped for it and they have yellow gas caps. In the Midwest, 10% ethanol is usually standard. 85% is often available and is becoming more commonplace. You lose a little MPG so need to figure if the discount is close enough to break even. It is rarely priced to save money overall. Ethanol at wholesale is usually lower priced though and it could compete. 

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(edited)

4 hours ago, Jan van Eck said:

It is just fantastic what salt corrosion does to cars.  They get wrecked in five years or less.  Some guys laboriously paint the undersides with Rustoleum or zinc chromate.  Every part I install underneath gets elaborately pre-painted.  You even have to put a light coat of spray paint on the threads of parts of the suspension to keep them from rusting solid  (and grease before installation, to build up a film barrier.  I have an entire muffler bracket that is now non-existent, all gone in two winters.  Amazing. 

Along the Interstate 80 in Pennsylvania in the winter you see these herds of deer, at least one deer every hundred yards, standing in the shoulder licking the pavement at the right lane stripe.  They are doing a "salt lick," ad the motorists just whizz on by, doing a steady 80.  And no surprise, every quarter mile there is a mangled deer carcass, where the spacing got too slim.  The car?  That gets exported to Japan to be remade into new Toyotas.  Total deer road kill in PA each year:   1.25 million deer.  The cars take a serious beating also.. Does anybody slow down?  Nope.  Might as well be the Autobahn. Welcome to America. 

There was a hockey arena up here where the top of the arena was built as a two-level parkig garage.  The architects forgot about the salt in the ice lumps hanging off the wheeel wells.  That stuff melted in the garage levels and rotted out the concrete. Only 25 years old, pieces of the garage floow would fall out ontothe fans below.  The garage had to be shut down, the inspectors reported it was destroyed by road salt dripping off the cars, and the building had to be torn down.  Oh, well. 

I understand what chlorides do to steel. I paint every fastener I deal with here in the west Texas oilfield with never-seize to prevent aggravations should I come across them again. Surface and intermediate holes here are drilled with brine and it is a killer for steel bolts!

As for deer in Texas, I read a statistic quite a few years ago that said that half a million deer/year are killed by motorists in this state and about the same are killed by hunters. I live in the central part of Texas when I am not working and I know first hand that part of the state is completely overrun with deer. I drive through "deer country" as I travel to and from work and am ever vigilant for them trying to intercept my pickup as I travel. Not fun! At least our deer are not nearly as big as those where you live!

 

R2020

Edited by MUI
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3 minutes ago, MUI said:

I live in the central part of Texas when I am not working and I know first hand that part of the state is completely overrun with deer. I drive through "deer country" as I travel to and from work and am ever vigilant for them trying to intercept my pickup as I travel. Not fun! At least our deer are not nearly as big as those where you live!

 

R2020

That's nothing!  Up here in the North Woods we have moose, which are huge lumbering animals well over 1,000 lbs, on long legs, and if you whack one you clip the legs off and that massive body comes through the windshield and decapitates the motorist and everyone else inside, just like if a chainsaw took your head off.  Ugh. 

Then remember that the North Country is also rural and farmland, complete with cows and bulls.  When that big old bull starts looking for a woman in the middle of the night, he breaks through the fencing and goes wandering around. There are cases of "flatlander" motorists who speed on unlit country roads and then whack a bull, which is death to both the bull and the motorist.  You really gotta be careful out there. And that brings focus on a basic rural truth: everyone assumes that nothing will ever go wrong - until it finally does. 

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(edited)

18 minutes ago, ronwagn said:

Some engines are prepped for it and they have yellow gas caps. In the Midwest, 10% ethanol is usually standard. 85% is often available and is becoming more commonplace. You lose a little MPG so need to figure if the discount is close enough to break even. It is rarely priced to save money overall. Ethanol at wholesale is usually lower priced though and it could compete. 

I am not a chemist but my father is a retired one and he told me years ago that ethanol has about 25% less energy by volume than 100% gasoline. If you do the math on that you realize the price on any gasoline/ethanol blend offered for sale here is NOT a good deal since the lower price of E85 (this is the 85% ethanol product sold here) does not make up for the lack of energy in the blended fuel when compared to straight gasoline when comparing miles per gallon realized when comparing MPG of each fuel.

I buy 100% gasoline whenever I can find it and the price makes MPG sense. I know the engine in my pickup appreciates it as well!

 

R2020

Edited by MUI
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2 minutes ago, MUI said:

I am not a chemist but my father is a retired one and he told me years ago that ethanol has about 25% less energy by volume than 100% gasoline. If you do the math on that you realize the price on any gasoline/ethanol blend offered for sale here is NOT a good deal since the lower price of E85 (this is the 85% ethanol product sold here) does not make up for the lack of energy in the blended fuel when compared to straight gasoline when comparing miles per gallon realized when comparing MPG of each fuel.

I buy 100% gasoline whenever I can find it and the price makes MPG sense. I know the engine in my pickup appreciates it as well!

 

R2020

It all depends on the pricing, also a lot of people want to support the agricultural industry which is huge. I must admit that the ethanol discount is stingy. 

An engine with a proper computerized modern fuel system adjusts itself for pure gasoline or a percentage of ethanol. I use my large NV3500 with gasoline only since it is not so equipped. 

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