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Frayne Olson, a North Dakota State University Extension grain marketing specialist, said that if U.S. negotiators want to force China to buy its traditional annual purchases of U.S. soybeans, it would require levels (the red line) much higher than historic purchases for the rest of the year. Photo taken Jan. 1, 2018, in Fargo, N.D. (Forum News Service/Agweek/Mikkel Pates)

Keep a lid on the dry edible bean pot

FARGO, N.D. — Ongoing trade war fallout in corn and soybean markets could cause a production shift that could overwhelm the dry edible bean supply in 2019, speakers said at an annual Northarvest Bean Growers Association meeting in Fargo on Jan. 18.

About 400 to 500 from the North Dakota and Minnesota region attended Bean Day, focusing on a major specialty crop category. Topics ranged from production issues, such as disease management and fertility, to the issues of trade.

Rebecca Bratter, executive director of the U.S.Dry Bean Council, based in Portland, Ore., said the U.S. industry actually exported more beans in 2018 than they had in the previous year, but the impacts on trade disruptions are about to hit. "It was one of the most challenging years I've seen," Bratter said. If soybean prices are low at planting time in 2019, farmers will be tempted to shift toward the much smaller dry bean market, she said.

"Don't overdo it," said Tim Courneya, executive director of Northarvest Bean Growers Association, regarding planting beans."We're scared today about maybe dry bean acres getting out of hand, beyond our demand.

"When you have 90 million acres of corn, 90 million acres of soybeans in the United States and you have a swing of 1 to 2 percent of those acres where farmers are thinking about growing a 'few' dry bean acres, then dry bean acreage will explode to the point where demand will be down the road," he said.

Courneya said producers are feeling the effects of the tariff retaliations, on top of "hangups" in the trade with Mexico as the administration renegotiated the North American Free Trade Agreement. On top of that, farmers have suffered from the partial government shutdown that has deprived industry planners of important reports on supply-demand factors.

Good, not great

Bean prices have been "good but not great" in the two or three years, Courneya said.

Prices have ranged from the upper $20 per hundredweight for navy, pinto and black beans, to $40 per hundredweight for specialty crops such as kidney beans. Yields also were above average for two years in a row in the region.

The relative dryness in the past two growing seasons has tended to favor the pinto yields and quality, which can suffer from drown-out and diseases if conditions are too moist.

U.S. steel and aluminum tariffs on the European Union were met by EU in June imposing 25 percent tariffs on edible beans. The U.S. export numbers of 2018 don't show large declines because some buyers bought early.

The bean industry has seen a significant decline in exports to the EU in the first two months of the current marketing year. Big exports there are dark red kidney beans, navy beans and great northern beans. "I think those three bean classes are going to feel that," Bratter said, although the national bean council is looking for other other markets.

"We're talking about 120,000 metric tons," she said. "It's our largest market. You can't reroute quite that easily."

Mexico and the EU are the two biggest trading markets for U.S. dry beans.

The threatened pull-out of the North American Free Trade Agreement seems to have "ended well" with its replacement by a similar agreement pending congressional approval.

Some positives

One potential positive for dry beans is that China will reduce its acres of dry beans in order to plant more soybeans. China competes with U.S. exporters for Latin American markets and is already exporting less than usual. "We have a chance to pick up that market share," she said.

Bratter acknowledged there is considerable support in the farming community for the Trump administration, but senses a "separation happening," where farmers are withdrawing support of the administration's trade policies.

Another plus was that the U.S. government bought about $50 million of dry beans for the food programs in schools, Courneya said.

Frayne Olson, a North Dakota State University Extension Service grain marketing specialist, said he sees brighter times ahead for agriculture in five years, but discussed several issues weighing on the market for soybeans and its sister dry bean crops:

• Brazil so far has a good crop of soybeans coming, with about 6 percent of the soybeans harvested.

• A U.S./China trade negotiation to soften the impact of a tariff war on U.S. soybeans depends in part on whether the U.S. requires purchasing soybeans or allows it to buy "agricultural products," which might become focused on pork. Olson noted Smithfield Foods is one of the largest pork producers and slaughtering companies in the U.S. "Who owns Smithfield Foods?" (Answer: China.) "Think there's a correlation? Just askin', just askin'," he said.

• Trump on Dec. 1 put a 90-day deadline for Chinese trade negotiations or the U.S. will impose new tariffs. "On March 2, we're going to find out if the soybean market is going to have a lot to digest," he said. He noted this is bad timing as U.S. farmers must make price selections for crop insurance in February.

• EU officials have emphatically stated that agricultural trade will not be part of new negotiations over trade disputes. "What does that do for the navy, kidney, and great northern bean market?" Olson asked, and quickly said, "It doesn't help."