RRV soybeans to show 2018 profit, economist estimates
GRAND FORKS, N.D.—Andrew Swenson was a little surprised to see it, too:
His projection that North Dakota and Minnesota farming operations participating in the Red River Valley Farm Business Management program will, on average, make money from soybeans this crop season. He estimates that farms in the Red River Valley program will enjoy a net return of $40.68 per acre from soybeans in 2018.
"It's really not what I was expecting," says Swenson, North Dakota State University Extension farm and family resource management specialist. Swenson was among the presenters at the annual extension Outlook Conference for Agricultural Lenders Oct. 29 in Grand Forks.
His 2018 profit estimates for soybeans, wheat and corn were included in his presentation of farm financial performance and outlook.
Soybean prices have tumbled, in part because of the trade war with China, a major importer of U.S. soybeans. As a result, many in Upper Midwest agriculture have worried that soybeans — traditionally a profitable crop — will not make money for producers in 2018.
Swenson estimates that Red River Valley farmers in the program will receive an average of just $7.65 per bushel in 2018, down from $9.06 in 2017. But that downturn will, on average, be more than offset by higher overall yield: a projected 47 bushels per acre in 2018, up from 39.02 bushels per acre in 2017, when farmers in the program had a negative net return of $2.99 per acre from soybeans.
A projected increase in "miscellaneous income" — from $14.21 per acre in 2017 to $52 per acre this year — also boosts the profit outlook for Red River Valley soybean farmers, he says.
The increase reflects payments through the national Market Facilitation Program, which the Trump administration is using to help farmers hurt by the trade war. Without the payments factored in, there would have been a only a small net profit from soybeans.
Some area farms have enjoyed excellent soybean yields this year, which helps offset the lower prices, says Jared Hagert, an Emerado, N.D., farmer who's active in both the North Dakota Soybean Council and United Soybean Board.
"Of course, we know that every farm is different," and that some farms won't have good yields, Hagert says.
He also notes that some area farmers still have many soybean acres left to harvest.
Soybean farmers who sold part of their 2018 crop well in advance of harvest, at relatively attractive prices, mitigated some of the pain of the poor prices now in place, says David Holt who raises soybeans at Elizabeth, Minn., in Otter Tail County.
Swenson stresses that his estimates are preliminary and only for farms enrolled in the Red River Valley Farm Management Program.
He also stresses that adverse harvest conditions in parts of the Red River Valley complicated his overall yield estimate. But exceptionally strong yields in other parts of the valley bring up the overall average, he says.
Many area soybean farmers will be hurt by both poor prices and poor yields, especially after uncooperative weather during harvest, and likely will finish in the red with the crop Swenson says.
"I feel bad for the guys getting hit with the poor prices and the poor yields," he says.
He estimates that Red River Valley farms enrolled in the program will make an average of $21.44 per acre from corn and an an average of $18.08 per acre from wheat in 2018. Both those estimates were based, in part, on strong projected yields for the two crops, particularly corn.
But the early 2019 outlook for soybeans isn't so bright. Swenson estimates that Red River Valley farmers enrolled in the program will lose an average of $9.34 per acre next year.
Though he projects that the average per-bushel price for soybeans will rise next year, that increase will be more than offset by declines in projected yields and miscellaneous income.
"Soybeans have been a crop that a lot of farmers have counted on to make money. So it's concerning to see the projection for 2019," he says.