The US financial and political media went nuts over a number yesterday: 600 points. Most missed the more important number: eight dollars. Yesterday afternoon, the closing bid for July soybeans dropped below $8 a bushel to its lowest price in a decade. And that bushel of beans that’s going to bring Farmer Joe eight bucks cost him nine to plant.
This is a much B’er F’ing D than most political and financial observers understand.
If you hear anyone, farmer or city slicker, liberal or conservative, say something as stupid as, “What do soybean farmers have to do with the real economy?” ignore that person. With prejudice.
First off, soy is a huge part the US economy and trade. Pundits and drunk uncles and even some Fox-deluded farmers say the farmers may have to take a hit to pay back the Chinese for jacking movies and software, which are such valuable industries. After all, Hollywood, with all its huge hits, contributed $43 billion to the US economy in 2017.
Soybeans alone made up $41 billion the same year. (Note: That linked Forbes article, while a bit out of date, gives a good sense of the value of the soy market).
Secondly, there are no “soybean farmers.” Everyone with acres and big steel is a soybean farmer. You’ve got corn and bean farmers and wheat and bean farmers. Down here we’ve got cane and bean farmers.
Beans don’t yield for squat but they’re cheap to plant, fix nitrogen and reduce next season’s fertilizer bill on other crops. Like picks and strings in a music store, they fill in spare acreage with a decent paying commodity. Not too much work and you could clear a buck or two a bushel. Back in the day. Two years ago.
When the president started his trade war and tanked the price, farmers kept the faith, front-selling some of last year’s beans at a bare price and storing the rest in hopes of a decent return when a deal was struck and the price bounced.
This week, the graveyard-whistling went silent.
“Farmers are Starting to Lose Hope” Yahoo News
“Farmers Get Impatient with Trump’s Trade War: ‘This Can’t Go On’” CNN
“Trump Leaves Farmers Reeling” NBC
“Drowning in Tariffs” USA Today
Read the quotes in those stories. They are mostly from industry group reps who have to soften tone for the media. I doubt if their farmer members are quite as measured.
Farmers, who are all soy farmers, just realized there’s not going to be any last-minute reprieve call to the death chamber, and that $8 number is much bigger political news than points in the market or a two-dozenth Democratic presidential candidate.