Drought, growing conditions add to threats

(AP) – Soybeans have been caught in the crossfire of escalating trade tensions, with retaliatory Chinese tariffs on U.S. soybean exports causing particular concern among American growers.

But in Missouri, tariffs aren’t the only issue for soybean farmers. Growing conditions have also stoked worry, with localized drought threatening to put the state’s growers at a disadvantage.

Of the 10 leading states for soybean production, Missouri has the worst current crop conditions, with about 47.7 percent of its crop in good or excellent condition, according to the U.S. Department of Agriculture.

“This year, it looks like a lot of states will have good production, which will help keep prices low, which will hurt Missouri farmers with below normal production,” said Robert Garino, the Missouri statistician with the U.S. Department of Agriculture’s National Agricultural Statistics Service.

To understand how that works, it can be helpful to consider the broader view of the soybean market.

Since the U.S. is the largest soybean producer in the world, it plays a prominent role in determining the crop’s global supply and demand — and thus, prices, Garino said.

“Demand usually is fairly steady from year to year, increasing over time,” he said. “Due to weather, production can vary. When production is low, prices rise — given demand stays about the same.”

The amount of soybean production mainly depends on the number of acres planted and the yield per acre, according to Garino. Since a drought in 2012, the U.S. has generally seen good yields, and the acres planted with soybeans have increased.

“So,” Garino said, “production has gone up, and prices have gone down.”

When prices stay low, the volume of production is key to farm profit. And volume depends a lot on growing conditions.

“The better the conditions,” Garino said, “the better the yield and production.”

However, this year, Missouri soybeans aren’t growing as well as they have the past two years, according to USDA data.

Weather, including temperature and rainfall, is the main contributor to soybean growth conditions, Garino said.

“Without adequate rainfall, soybeans will not develop to yield their full potential,” he said. “In Missouri, soybeans begin setting pods in mid- to late July and continue through August, so getting enough rain is important at this time.”

Which is where the lack of precipitation enters the equation. Large swaths of Missouri are experiencing drought this year, according to the latest U.S. Drought Monitor, released Thursday.

“The last time we had a drought, in 2012, Missouri yield was about 25 percent less than it would be in a normal year,” Garino said. “Drought, like we’re having this year, can limit yield.”

That could add up to a worst-case scenario for Missouri soybean growers, Garino said: drought causing lower production locally as overall U.S. production remains solid.

“That means prices stay low and Missouri producers have less production,” he said. “So the total dollars they receive for their crop is low.”

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