Are $3 Beans Possible if Trade Talks Fail?

November 9, 2018 08:40 AM

China and the U.S. could be bringing a thaw to the trade war during the G20 summit in Argentina later this month. China's President, Xi Jinping, saying a deep exchange of views is expected at the meeting. He met with former U.S. Secretary of State Henry Kissinger. After that meeting, Xi said that China wants to resolve differences with the U.S. but that America has to respect China's development path and interests. 

How those meetings and discussions go will likely set the tone for soybean prices in the next few months. Market analyst Bill Biederman tells AgDay TV host Clinton Griffiths if talks are positive soybeans could jump higher.

"We definitely move higher quickly," says Biedermann. "World buyers jump in to try and buy that big discount in the United States."

Biedermann says at current prices buyers can make in the neighborhood of a dollar a bushel over freight costs. 

"That would happen right away and it would drive prices higher," says Biedermann. "Our farmers aren't going to be in any hurry to sell."

He says many farmers have already decided to store soybeans and getting those out and to the market may take more enticement. Others may simply need the cash this season.

"You know if you're selling now it would probably be a good idea to try and find a cheap option to buy," says Biedermann. "So just set yourself up for if this actually does work out then you're ready." 

On the other hand, if the trade talks go south Biedermann says beware.

"The first thing that happens is your carryover is realistically going to get revised to about 1.2 billion bushels," says Biedermann. "That's like corn doesn't that mean we go to three dollar beans?"

Biedermann isn't sure if $3 dollar beans are possible but he does believe continued tensions create a long-term issue for American farmers. 

"It sets you up for the years to come because China won't come back," says Biedermann. 

Find out what strategy Biedermann thinks could help protect prices for this scenario in the video above. 

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Spell Check

Franklin, MN
11/9/2018 10:17 AM

  Seriously, $3 beans is a catchy tag line, but trade war or not, if beans get into the $5/6 range, you dang will know someone will come in and buy the crap out of our beans, and they will eventually end up in China's hand. I understand the trade war bit, and hurting the prices, but come on. $3 beans? We might as well say we will give away our beans.

11/9/2018 02:16 PM

  Everyone, get past the $3 headline. If it read $4 or $5 we're equally in trouble. But that's not the point. Let's get real. Every global trading company and every global trading country like China have developed a psychological profile on Trump. They know who he is, how he'll react under various scenarios and his personal vulnerabilities. In essence, they can read Trump like a book. Because of this, I'd be really surprised if they back down at this point when negotiating with Trump. Instead, they believe it's in their best interest to create alternative sources of basic commodities like beans, knowing Trump won't back down without huge concessions. So maybe this tariff thing will get resolved quickly, however I put the odds at less than 20% and that's a huge problem when it comes to selling beans in the marketplace because there's virtually no export demand. Without exports, we're screwed.

eastern, MO
11/9/2018 07:24 PM

  I am really sick of Trump. Like the NAFTA deal, he will ultimately have to put a little lipstick on our trade relations with China and proclaim a great victory for himself. He is the most narcissistic person I've ever seen. Rural America better wake up before this fool causes lasting damage . . . and it ain't just us farmers who he's hurting.


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