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American Farmers Are Stockpiling Their Soybeans, Waiting For Prices To Rise Again

Farmers across the US are storing the soybeans taken from this year's harvest rather than selling them immediately. That approach brings with it a lot of risks.

There is currently something of a trade war going on between the US and China. Hopefully, the tension between the two countries will ease when trading issues between the two are discussed at next month's G20 summit. For now, however, certain groups of people are suffering. In particular, America's soybean farmers.

According to Bloomberg, China is currently the top market when it comes to buying the US's soybeans. However, due to the tariffs imposed by the US Government, China is currently importing 90% fewer soybeans than it was compared to September 2017. That has led to the crop currently fetching just $8.87 per bushel. Just eight months ago, a bushel would fetch a farmer around $2 more than that.

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All of the above has led to America's soybean farmers taking a pretty big risk. Instead of selling their soybeans as soon as they have pulled them out of the ground, they are storing them instead. That is a pretty big gamble to take. Soybeans have to be kept extremely dry in order to stop them from spoiling. If not, the beans will take on water, quickly go bad and just turn into unsellable and inedible mush.

via Bloomberg

Not only are the farmers gambling on their soybeans staying dry, but they're also banking on prices increasing soon. Futures currently predict that the crop's prices will increase next year. However, that is merely a prediction. It really all hinges on how talks go between the US and China at the aforementioned G20 summit in December. Soybean farmers will be watching closely, praying the relationship between the two countries improves as soon as possible.

Another big issue is that since China is currently not buying soybeans from the US, or at least not as many, ports that export the crop to Asia aren't buying. So farmers have no choice but to store the beans, whether they want to sell them now or not. According to the USDA, by the end of this year, America's soybean inventory will have more than doubled to a staggering 955 million bushels. Here's hoping the US and China can settle their trade differences sooner rather than later, otherwise there will be an awful lot of soybeans going to waste.

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