With soybean prices low, Iowa farmers plan to store more through the winter

Storage capacity could be challenged with a record harvest predicted

Soybeans grown by Nate Hofmann and his family are stored in a grain bin on the land they farm in rural Marion Thursday,
Soybeans grown by Nate Hofmann and his family are stored in a grain bin on the land they farm in rural Marion Thursday, Oct. 4, 2018. (Rebecca F. Miller/The Gazette)

Last Thursday morning, Nate Hofmann stood up to his ankles in harvested soybeans in a grain bin he rents north of Marion.

Parts of the bin were empty after an earlier delivery. But at the end of harvest season, it will be filled to the brim, several dozen feet tall, with about 40,000 bushels of the crop.

Hofmann, co-president of the Linn County Farm Bureau, said the product in this bin usually is sold off before March, and much of it was purchased earlier this year in a forward contract.

Iowa soybeans in storage, September 2010-2018

Max Freund / The Gazette

But as with many producers across Iowa, this year he is planning to hold onto the rest of the crop longer than usual — and hope prices rise.

“For us ..., we’re almost always clean out for soybeans,” he said. “I think the price wasn’t good enough for people” this season.

Farmers in Iowa this year are storing the highest amount of soybeans in more than a decade, as ongoing trade disputes with China and an expected record yield keep prices for the commodity lower than the cost of production.

The most recent U.S. Department of Agriculture grain stocks report, released Sept. 28, said corn in storage in Iowa fell 6 percent from this time last year, to 475 million bushels.


But soybeans in storage in Iowa increased 66 percent, to 87.9 million bushels, the highest September figure since 2007, the report said.

That number doesn’t come close to the record of 158 million bushels in Iowa set in 1986 in the midst of the Farm Crisis. However, the latest figure is one of multiple signals showing the magnitude of China’s influence as the world’s largest importer of soybeans.

Beijing slapped a 25 percent on American soybeans and other agricultural products entering the country earlier this year as part of a trade dispute between the world’s two largest economies, leading Chinese importers to look to foreign countries for a less-expensive product.

Iowa State University economist Chad Hart said the most recent report doesn’t yet reflect the grain planted earlier this year because it hasn’t been harvested or sent to grain holding yet.

The next USDA grain storage report, scheduled for January, will reflect how much grain from this year’s season is stored.

The amount of grain in bins steadily has increased over the past several years across the country as seed engineering makes crops increasingly resistant to weeds, pests and disease. That has led to years of record or near-record yields.

This year’s sharp increase in siloed soybeans, combined with the trade dispute, is partially due to that trend.

“It’ll be incrementally more stressed than it has been in the past couple of years,” Hart predicted. “We’ve seen big crop after big crop hitting our storage capacity this past few years.


“What is unique about this year is this trade dispute, which is slowing down the usage of the crop.”

Ron Woeste, operations manager for Linn Co-op, said area producers already have booked all the available space at the cooperative’s two grain elevators in Springville and Alburnett, and he suspects it’s the same situation for other elevators in the area.

Holding for Better Prices

Farmers likely will hold onto those soybeans until prices improve enough to cover the cost of production, Woeste said.

Soybean were trading at $10.35 per bushel on April 2, the day China imposed counter-tariffs on U.S. goods. Prices slid over time, and the commodity has been trading below $9 since early August.

“They’re hanging onto them because the price declined so bad,” Woeste said. “ ... They got to get to a break-even, but we’re not there yet.”

That theory has credence from one of the largest oilseed processors in the world.

Two weeks ago, Bloomberg News reported Soren Schroder, chief executive officer of agribusiness giant Bunge, told attendees at the Wall Street Journal’s Global Food Forum in September that producers will try to store as many soybeans as they can and sell them later than usual on the futures market.

“Anybody who can store will do it,” Schroder said.

ISU’s Hart said that strategy could work if the trade disputes end. But it could backfire if too many farmers offer their grain at a later date as that would flood that portion of the market and minimize any higher prices they could get.

The USDA’s next worldwide supply-and-demand estimates report is scheduled for release this Friday. Hart said it will show where prices may be heading.

Cool temperatures, frequent rain

Both corn and soybeans can survive years in storage, depending on several factors — one of the most important being the condition of the crop when it was removed from the field.


A dry, fairly warm harvest reduces the amount of moisture the kernels and pods will carry into the bin, reducing the chance of mold growth.

But a series of rainfalls have passed through Eastern Iowa in the past two weeks, and more rain is forecast through next week in the area. Temperatures have dropped to highs between 50 to 70 degrees.

Those are not ideal conditions for harvesting crop for storage and might lead to grain loss.

“If these beans sit in these pods, they could get moldy,” Linn Co-op’s Woeste said. “Just because everyone thinks it’s going to be a record harvest, it might not be ... because we really haven’t gotten a harvest. We just got a really good start to it, but the weather has caused a lot of havoc.”

Some producers had been able to start harvest weeks earlier than usual due to prime growing conditions this summer.

The Price Gamble

Hofmann and other farmers planning to stow soybeans are taking a risk waiting for prices to rise.

Multiple factors are in play that affect how much a bushel of any commodity is worth, such as the amount of yields expected in a harvest domestically, how much crop foreign competitors are planning to grow and the amount of demand in the United States and abroad.

But with the price of soybeans below the cost of production, it’s a risk many farmers will take in an environment in breaking even is a challenge.

“We’ll see where it develops, but just because you store it over the winter doesn’t mean you’ll get a better price,” Hofmann said.

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