The Most Important Thing You Can Do Before Plant 2018

We’ve received a lot of emails since our launch of GrainCents in early December.

Today, I want to respond to a string of questions that we’ve received about China’s policies relating to corn, soybeans, and sorghum. These questions come after a plethora of events that have transpired that’s left many U.S. farmers worried about the country’s future relationship with the massive export market.

Oh, and as a reminder, planting season is just around the corner!


First, China is tinkering with the idea of restricting access to U.S. soybean producers. The country is conducting an analysis of what this restriction would do to its crushing industry and the subsequent costs associated with its livestock industry (It’s simple: Prices are going to rise, and a lot of Chinese buyers are going to be upset.)

Second, China also recently rejected four large cargoes of U.S corn and turned to Ukraine to get its needed grain. China said that it rejected these cargoes because the millers lacked the necessary paperwork and permits to handle GMO corn, a claim that left many people skeptical about Beijing’s motivations.

Third, China launched an anti-dumping and anti-dumping investigation into U.S. shipments of sorghum earlier this month. [1] The news rattled U.S. exporters. China is the top buyer of U.S. sorghum, which is used primarily as feed for its livestock and liquor distillery sectors as well. Last year, the U.S. shipped 4.76 MMT of sorghum to China. It was forecasted that this year’s imports would come around 5 MMT. China’s decision eliminated the premium that farmers had received for sorghum overnight.

All of these stories on their own are concerning. But too many people are focusing on the policy debate and not telling farmers what they need to do looking forward.

Let’s unpack the questions and focus on what you can do to ensure that you get the most money for your grain moving forward.

The “Why?”

The first question is: “Why did China make these decisions?”

The simple answer to the “Why” is that China is retaliating for the Trump Administration’s decision to put tariffs on solar panels and washing machines. China knows that if it wants to effect change in U.S. trade policy, the agricultural sector is the most vulnerable.

China did the same thing in 2009 to poultry shipments after the Obama administration put tariffs on tires. However, the policy largely didn’t work (more on that in a second.) The U.S. has a massive trade deficit with China, which consumes a lot of American agricultural products. They are attempting to rattle Trump’s base and force the U.S. to abandon its protectionist policies.

On the subject of sorghum, China is investigating claims that the U.S. government subsidizes the sorghum trade and allows farmers to sell their product in China at a loss. Buyers cut back their spending on sorghum immediately to avoid potential tariffs. That will create a lot of headaches here. We’re talking about an industry that evolved from nearly nothing five years ago and started booming so that farmers could sell their product to China.

China is starting to inquire about sorghum from Australia, a country which whom it shares a free trade agreement. This was a “crowded trade,” and many farmers were looking for a premium given the ongoing decline of corn and wheat prices across the Midwest.

I’ll talk a bit about the lesson from that boom in a minute, but let’s move to the next question.

The “What Now?”

The next question is “what will happen now.”

First, I am not convinced that China is going to restrict U.S. bean purchasing entirely, but we will see the People’s Republic continue to shift to Brazil for more soybeans, thanks to better protein quality.

This has been a growing trend, one that I noted several times for our GrainCents in the past few months. Brazil’s soybeans have higher protein content thanks to a longer growing season and more time in the sun. Also, U.S. farmers, to get three to five cents more per bushel, are putting a higher emphasis on yield than content.

I’ve seen a lot of people say that China is going to make this move to more Brazilian soybeans. Doing so would be extremely costly both financially and politically. While there might be a short-term price shock, I caution people from thinking that the U.S. soybean industry is going to collapse suddenly. Soybeans are a high-demand, international commodity. We’ll likely shift our exports to Europe while expanding processing capabilities within domestic borders.

Second, the sorghum decision has eliminated premiums overnight, leaving many farmers looking to the sky. The payoff that many had anticipated dried up, leaving about $1 billion up in the air. A lot of that grain is going to be sold for cheap, especially with another considerable corn crop on tap for this year.

Third, China does appear skeptical about the role of GMO crops in its supply chain. Even though the nation did loosen restrictions in 2017, the decision to turn to Ukraine for non-GMO corn and leave U.S. corn on the docks is an important consideration. That is why I want to talk about what farmers should consider with planting season underway.

What Should Farmers Do?

The final and the most important question is, “what should farmers do now?”

Hindsight is 20/20.

If we could go back to last year with the knowledge we have now, I’m sure a lot of farmers would have chosen to ditch sorghum and grown soybeans or maybe even oats, given the recent price rallies. But here’s the reality: We are where we are, and there is no going back. You need to think about the present and the future. It starts with one question that many people don’t ask themselves when the planting season begins:

What does the customer want?

As planting season picks up, U.S. producers should think about how their operations relate to the global food supply. Understanding where demand is rising – globally – and the associated trends (which currently include non-GMO soybeans) allows you to position yourself for premiums well ahead of time. You might have a plan to sell traditional crops to buyers with whom you have an existing relationship. But it’s vital to challenge your conventional thinking and understand where changes in consumer tastes are occurring.

It can’t just be about chasing a premium because “everyone else is doing it.” You need to be a bit more contrarian in your approach and start asking questions well ahead of planting season that can help you maximize your farm’s balance sheet.

Think about:

• What markets are underserved?
• What will get you the most bang for your bottom line?
• How can you be contrarian when certain people are panicking or expressing too much optimism?

Resources like GrainCents provide a deeper understanding of the politics and changing consumer tastes. Understanding and getting ahead of some of these broader macro trends is important because it forces you to think about the long-term sustainability of your farm, not short-term profits.

For our GrainCents subscribers, myself, Brennan, and coming soon, a new, third full-time analyst, will continue to identify those underserved markets and give our users more insight into where they might find those premiums (and why) moving forward.

Take the First Step Before Planting Season 2018

Sometimes it’s tough to do, but when grain prices are low like they are and margins are getting tighter (if not in the negative), the status quo does not work.

Going into the 2018 planting season, it’s time to think outside the box and start putting more of FarmLead’s tools in your toolbox. We continue to lead the industry in most innovative and most helpful when it comes to selling your grain.

From understanding what grain prices around you are doing with the free Grain Price Discovery tool, to knowing the quality of your grain via, or, catching up on daily grain price headlines in my Grain Markets Today, we are trying to make you more educated and informed when it comes to your grain marketing.

Using those tools, you can then set your price on the FarmLead Marketplace for your grain by posting a new offer for over 600 credit verified-buyers to see. It can be old or new crop contracts you’re seeking, and you can negotiate a straight cash deal, or just draft a basic contract if you think the futures price is going to rise in the future (pun intended).

And then finally, with our newest product, GrainCents, you’ll get highly actionable grain sales recommendations for the crops that you’re growing, as well as deep insights on various factors affecting those markets. We look at what’s bullish, what’s bearish, and what are some of the headlines that everyone is talking about but you need to ignore. After all, those “noise” headlines that everyone at the coffee shop isn’t helping increase the price of your grain, so why continue to discuss it.

We know the status quo isn’t working.  I strongly encourage you to start using the full capacity of the FarmLead suite of unbiased grain marketing tools to be more informed and better prepared when it comes to selling your grain.

There are over 8,000 farmers in North America already doing so.


About the Author
Garrett Baldwin

Garrett Baldwin is a content strategist and editor at FarmLead. He covers the global grain markets and public policy issues related to the agricultural industry. He is a graduate of the Medill School of Journalism at Northwestern University. He also holds a Master’s Degree in Economic Policy from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University, and an MBA in Finance from Indiana University.

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