American Soybean Association Gives Testimony About Impact of Trade War on U.S. Soybean Producers and Agricultural Economy

American Soybean Association (ASA) Board Member and Missouri farmer Ronnie Russell appeared today before the House Financial Services Committee Subcommittee on National Security, International Development and Monetary Policy, testifying on the impact of trade and tariffs on soybean producers and the larger agricultural economy.

“Soybean farmers like me are feeling the impacts of the tariff war, and they are unsure if they will be able to make it through another growing season,” Russell said.

“Older farmers are considering retiring early to protect the equity they’ve built up in their farms, while younger producers are looking at finding other employment.

“We may also see the shuttering of more businesses in rural communities whose livelihoods depend on the health of the farm economy.”

The 25% retaliatory tariff imposed last July has all but halted shipments to China, which up until last year was the largest export destination for U.S. soybeans.

In 2017, China purchased $14 billion worth of U.S. soybeans. Now, the tariff has caused immediate and severe damage to the price of U.S. soybeans, which fell from $10.89 to $8.68 per bushel last summer.

“Our finances are suffering and stress from months of living with the consequences of tariffs is mounting. Soybean growers need China’s tariff removed now,” Russell continued.

“Long-term, what farmers and rural communities need is predictability and certainty, which only comes through maintaining and opening new markets where we can sell our products.

“While we are working hard to diversify and expand other market opportunities, the loss of the China market cannot be fully replaced.”

Russell concluded his remarks by calling on Congress to urge the Administration to conclude negotiations with China that include an immediate lifting of the soybean tariff.

He also asked both Congress and the Administration to finalize and enact the US-Mexico-Canada Agreement (USMCA), to bring a sense of progress and stability back to U.S. soybean growers and rural America.

For more information, please contact Jessica Wharton at 202-969-7040 or jwharton@soy.org

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Minnesota Soybean Processors Continues Equity Drive For Planned Soybean Processing Plant in Spiritwood, ND

The final push of the equity drive for the planned North Dakota Soybean Processors plant at Spiritwood is concentrating on area investors, according to Bruce Hill, president of Minnesota Soybean Processors, the parent company of North Dakota Soybean Processors.

“We’re hoping for North Dakota investors and putting a couple on the board of directors of the plant,” Hill said. “… I think we have a little movement. No details, but it will take a little time.”

Connie Ova, CEO of the Jamestown/Stutsman Development Corp., said local investors would increase the economic impact of the plant to the local economy.

“Definitely would like to see those benefits coming back to North Dakota shareholders,” she said.

Minnesota Soybean Processors announced plans to construct a crushing plant in the Spiritwood Energy Park Association industrial park in February 2017.

Hill said the private placement memorandum, a document that projects the profits of the venture and the possible return to investors, has been updated to take into account the current levels of commodity prices and value of the products the plant would produce.

“Everybody should like what they see,” he said. “… The soybean market is working in our favor.”

Ova said the document includes a higher return on investment than previous projections.

While attempting to raise those investments, project leaders from Minnesota Soybean Processors are interviewing for some plant leadership positions and finalizing permits and agreements with local governments.

“All of the plans are working,” Hill said. “We finish the equity drive and get the contractors on the site and working.”

Brandy Johnson, administrative assistant who works with investor relations for North Dakota Soybean Processors in Jamestown, said much of the recent efforts by the company have been reviewing previous work.

“We’re working on making sure everything is where it needs to be,” she said. “Then, when we get the money, we can start digging.”

Upon completion of the equity drive and with a commitment from Minnesota Soybean Processors to move ahead with construction, the JSDC will transfer land south of the current Dakota Spirit AgEnergy plant to Spiritwood Energy Park Association as a site for the North Dakota Soybean Processors plant. The Energy Park Association would then contract for the construction of the rail sidings for the soybean plant.

Ova said the Energy Park would collect future lease and infrastructure payments to recover the cost of the land and rail sidings.

Hill said the plans still call for a 125,000 bushel per day processing plant with an engineer’s estimate of about $287 million for construction costs. The plant would process locally grown soybeans into a variety of products including biodiesel as a renewable energy source.

Minnesota Soybean Processors has actively sought investors since 2017. In April 2019, the company changed leadership with the termination of Scott Austin as CEO of Minnesota Soybean Processors.

In May, Hill said the company was still seeking $50 million in investments with a goal of completing the equity drive that month.

“I’m still as optimistic as I’ve ever been,” he said, referring to a new goal of completing the drive in time for construction to start in July.

French Oil Mill Machinery Company Hosts Manufacturing Open House

the French Oil Mill Machinery Company, a family-owned manufacturer of hydraulic press systems and processing equipment for the oilseed and polymer industries, hosted an open house for area educators, students, city officials, company employees and their families.

The event drew over eighty attendees who experienced a behind the scenes view of the company and their manufacturing processes.  Visitors observed machining operations on a four axis vertical
turning lathe and a five face bridge mill with SolidWorks part drawings and initial and finished parts on display.  In the Assembly Department, company representatives described assembly in
process on machines such as hydraulic press systems for composite and rubber molding and dewatering presses used in the production of synthetic rubber.  An electrical engineer demonstrated the electrical programming involved for the machines to operate. Some of the machines sold will ship to U.S. customers, while others are for customers in various foreign companies.

A new company video celebrating the company’s 119 year history and emphasizing the benefits of choosing a career in manufacturing was shown.  In addition, representatives from the Upper Valley Career Center, Edison State Community College and DRMA – the Dayton Region Manufacturer’s Association manned table top displays and shared information about the manufacturing industry and local educational programs offered.  The Company provided a raffle, a t-shirt giveaway and dinner to round out the evening event.

Tayte French Lutz, who is fourth generation of the family in the business and serves as French’s Director of Marketing commented, “At the top of our company core value list is Customer First. To us, the word customer extends beyond our traditional customers and incorporates our employees, their families and our community.”  She continued, “By opening our doors for this event, we strengthen those relationships for the mutual benefit of us in the Piqua area and for the manufacturing industry at a whole.”

French Oil Mill Machinery Company is an ISO-certified, 4th generation family-owned U. S. company that custom designs, manufactures and supports process equipment for the molding, oilseed and synthetic rubber industries. Since 1900 French has partnered with their stakeholders in over 80 countries worldwide to provide products with superior value and superior service that improve their customers’ productivity and reduce their overall production costs. French’s 225,000 square foot worldwide headquarters and manufacturing facility are located in Piqua, Ohio.

$10 Million Soybean Processing Plant Coming to Michigan

A Wisconsin-based soybean processor is getting $10 million from the Michigan Economic Development Corp. to help open a new soybean processing plant in Michigan’s thumb.

State Rep. Phil Green, R-Millington, announced that Quality Roasting LLC will be developing a new soybean processing plant in the village of Reese and the state is giving them $10 million in private activity bonds to build the new processing plant.

“I’m happy to see this partnership between the state and a business within our community,” Rep. Green said in a news release.

The company will use the money to acquire the land, construct the manufacturing facility and purchase the equipment needed.

He said it will will bring 6-8 permanent jobs in the area, in addition to construction and utility jobs as well.

It will be another soybean processor in the state of Michigan. Zeeland Farm Services is one of the main ones in Zeeland. That soybean processor also plans to build a second processor near Ithaca, Michigan as well.

“Any more usage of soybeans is a good thing,” Jay Ferguson, vice president for Michigan Soybean Association District 4. “A lot of the beans got to go to Toledo or Windsor or Zeeland.”

The Tuscola County project was previously awarded an $80,000 Michigan Business Development Program performance-based grant in support of this project.

China (COFCO) Continues Purchasing U.S. Soybeans

China’s state-owned procurer Cofco Corp. bought another 1 million metric tons of the grain last week, just days after placing its previous orders, Bloomberg reports.

Last Saturday it announced that it had bought 2 million tons from US suppliers following the last set of trade talks in Washington. Since the two countries agreed to a 90-day truce period ending March 1, China has pledged to increase its purchases of US agricultural products, on which it had previously placed 25% tariffs.

Sales are now picking up after almost entirely ceasing in the second half of 2018. Soybeans are a significant US export to China, which buys on average 30 million to 35 million tons a year.

The speed at which new orders are being placed, and their size – recent week’s included some of the largest daily soybean transactions on record – suggest that China is making good on its pledge, potentially as a sign of continued good will as the two countries search for a resolution.

U.S. Soy Processors Expand Domestic Crush Capacity

A recent study indicates that two new crush facilities are expected to open their operations in 2019, with a third crush plant expected to start up by the end of 2021. The initial facilities to open are to be in Michigan and South Dakota, with the third to be located in North Dakota. U.S. soybean processors have historically built crush plants near major livestock feeding areas, as it is more cost effective to ship the beans than it is the finished protein meal.

For the U.S., that means that most crush plants are in either the Midwest, to supply hog, cattle and dairy operations, or in the Mid-Atlantic and Southeast where the majority of U.S. poultry production is based. The map that follows highlights states with plants that are members of the National Oilseed Processors Association, or NOPA. NOPA is the major organization of North American oilseed processors and is estimated to capture about 95 percent of all oilseeds processed in the U.S.

Once up and running, these additional processing plants are expected to grow U.S. crush capacity by 6 to 10 percent and consume an estimated 120 million bushels per year. The new plants are expected to crush soybeans at a higher rate of 100,000 to 120,000 bushels per day, whereas older facilities could process just 70,000 to 120,000 bushels per day. With this improved technology, these plants are expected to result in adding 2.8 million short tons of soybean meal and 1.4 billion pounds of soybean oil to the market per year.

The facilities in the Dakotas are expected to move most of its soybean meal that isn’t consumed in the local feed market out via the Pacific Northwest while the crush facility in Michigan would be able to move product not consumed locally via the Great Lakes and out to the Atlantic.

The impacts of this expansion are expected to be mostly favorable for U.S. soybean farmers as the additional demand support basis levels and cushions farmers from export risk.

For processors, the additional capacity may hurt margin structure in the short-term as supply outpaces demand forecasts, but in the long run, the new facilities may close some processing and focus capacity at more profitable facilities. For global buyers, the additional crush capacity means larger supplies of U.S. Soy-based meal and oil to meet growing populations and developing consumer needs.

Source: USSoy.org

Cargill Plans $37 Million Investment in Cedar Rapids, IA

Agricultural giant Cargill is proposing a multimillion upgrade to its soybean processing plant in Cedar Rapids.

The Minneapolis-based company plans a $37.62 million expansion and facility modernization to what is called the Cedar Rapids east soybean facility at 410 C Ave. NE, in an industrial section north of downtown near Cedar Lake.

“The potential investment is more about upgrading our equipment to continue to provide employees a safe place to work, while also increasing our efficiency,” said Victoria Bagley, a Cargill spokeswoman.

Cargill is seeking a resolution of support for a Business Financial Assistance Application to the Iowa Economic Development Authority for tax credits under the state’s high-quality jobs program. Cargill also is asking the city for a local match if it receives the state grant of $429,800, estimated to be worth $367,700 in tax breaks over 10 years.

The City Council is scheduled to vote on the plan when it meets at noon Tuesday at City Hall, 101 First St. SE.

“It says a lot about Cargill’s commitment to the area,” said Ron Corbett, business retention and expansion strategist for the Cedar Rapids Metro Economic Alliance. “This is a great way to start the new year with a $37 million investment by one of our anchor companies.”

Such an investment also supports a secondary economy of plumbers, electricians and others to service the equipment for years to come, and with farmers throughout Eastern Iowa supplying the plant with soybeans, he said.

By comparison, Heart of America plans a renovation and hotel project in Cedar Rapids of more than $50 million, which city officials have said is the largest private investment ever in the city’s downtown.

The Cargill expansion comes after the acquisition of Cedar Rapids-based animal nutrition company Diamond V in 2017. Cargill also has proposed a $6.5 million rail yard on public land in the Rompot neighborhood. The council initially supported the project, but has slowed the process under pressure from resistant neighbors.

Cargill, which has about 400 employees in Cedar Rapids, also operates a corn milling plant in southeast Cedar Rapids and a west soybean processing facility.

Cargill’s plans for the east soybean facility include $6.12 million in building construction and site preparation and $31.5 million in machinery and equipment, design and engineering. The expansion would add 27,000 square feet and retain 48 jobs, according to city documents. The plan does not call for new jobs.

“This would primarily swap out equipment for their processing and add some building improvements,” said Caleb Mason, a Cedar Rapids economic development specialist. “This is to modernize the plant with current equipment.”

He said the expansion would be within the existing site footprint and occur this year.

The property’s value, which is $3.3 million, according to the Cedar Rapids Assessor’s Office, is projected to increase by $2.1 million from the improvements. The tax break would apply only to new value. Cargill would still pay a net of $1.8 million in taxes over the next 10 years, according to city documents.

More Soybeans Headed to China as Trade Talks Planned

China is back in the market for U.S. soybeans after taking a holiday break as Washington and Beijing plan more trade discussions.

On Wednesday, Cofco Corp., China’s biggest food company, was asking for prices, according to four traders familiar with the process, who asked not to be identified because talks are private. The inquiries were for February and March delivery, three of the traders said. While there’s market talk that some purchases have been concluded, both Cofco and state stockpiler Sinograin declined to comment.

The renewed interest comes as trade officials from the two countries are scheduled to sit down in Beijing next week for the first face-to-face negotiation since President Donald Trump and his counterpart Xi Jinping agreed to a 90-day truce to their trade war last month. The prospect of more buying sent futures in Chicago up 1.3 percent on Wednesday.

“It was a good start to 2019 for the beans,” Charlie Sernatinger, global head of grain futures for ED&F Man Capital Markets Inc. in Chicago, said in an emailed report. “Shorts covered off of talk that China was coming back in to buy U.S. cargoes and forecasts for Brazil went drier.”

China last made a big purchase of soybeans before Christmas, scooping up about 1.2 million metric tons for delivery by Aug. 31, according to the U.S. Department of Agriculture. That was on top of 1.56 million tons in the week ended Dec. 13. Cofco said it made two purchases, while Sinograin said it bought in batches “to implement the consensus achieved by state leaders.”

Bulk carrier Spitha is en route to China after loading soybean at the Export Grain Terminal in Longview, Washington, according to vessel tracking and USDA inspection data. EGT is a joint venture between Itochu Corp. and Bunge Ltd.

U.S.-China trade discussions are “coming along very well,” Trump said in a Cabinet meeting at the White House Wednesday.

With the U.S. government shutdown, there won’t be any USDA confirmation if purchases are made. Despite speculation, traders said Wednesday that there were still no Chinese bids for other feed grains such as corn or sorghum.

“We heard indications out of China that buyers could come for U.S. corn in January, but we have yet to see confirmation,” said Arlan Suderman, chief commodities economist in Kansas City, Missouri for INTL FCStone. “Supplies are ample, but the balance sheet would quickly tighten if China re-enters the market with significant purchases.”

China Trade War Rattles Investors in New U.S. Soy Processing Plants

The U.S.-China trade war is spooking potential investors in soybean crushing plants planned for Wisconsin and New York state, developers said, casting doubt on the future of a sector that had been a rare bright spot in the U.S. farm economy.

Crushers in the United States have been posting near-record profits by snapping up cheap and plentiful soybeans no longer purchased by China and making soymeal and soy oil for export to Europe and Southeast Asia.

But margins are not predictable as the United States and China attempt to resolve their trade differences before a March 2 deadline, adding another puzzle as investors parse out the costs and impacts of a trade dispute between the world’s two largest economies.

WSBCP LLC, or the Wisconsin Soybean Crushing Plant, is struggling to find backers for the state’s first soy processing facility because of uncertainty in agricultural and financial markets over the trade conflict, said Phil Martini, chief executive of industrial contractor C.R. Meyer & Sons Co, who is overseeing the project.

“I’m not a mental giant, but it doesn’t take one to think people are uncertain about what’s going on,” Martini said. “The crush margin is very good, but it can go the other way.”

China bought about 60 percent of U.S. raw soybean exports last year in deals worth $12 billion, but has mostly been buying beans from Brazil since imposing a 25 percent tariff on American soybeans in July in retaliation for U.S. tariffs on Chinese goods.

U.S. President Donald Trump and his Chinese counterpart Xi Jinping agreed on Dec. 1 not to impose additional tariffs for 90 days, a truce that spurred Chinese purchases of a few million tons of U.S. soybeans this month.

It is unclear when or if Beijing will remove its soy tariff, a move that would spur more deals and lift U.S. soybean prices in a boon to U.S. farmers and a blow to crushing margins.

Construction on the $150 million plant in Waupun, Wisconsin, is set to begin in 2019, with a projected opening in 2020, according to a June statement from the city, which owns the land where the facility would be located.

Martini said it remains to be seen whether the timetable needs to be postponed. He is also looking for livestock producers to commit to buying the plant’s products.

Kathy Schlieve, Waupun’s economic director, said the project would likely be delayed because the investor pool is not finalized.

“It’s different dynamic and we’re really trying to understand that,” Schlieve said about the trade war.

Shift from 2017

The uncertainty is a turnaround from last year when farmer-owned agricultural cooperatives were building new soybean crushing plants at the fastest rate in two decades after several years of large crops.

U.S. grain merchant Archer Daniels Midland Co set a new record for crush volumes in the third quarter and benefited from strong margins.

But after months of soybean futures prices hovering around 10-year lows due to the lack of Chinese buying, farmers have little room for new ventures.

“There isn’t a lot of extra money out there to invest in something like that,” said John Heisdorffer, an Iowa farmer and chairman of the American Soybean Association.

New York plant

The trade war also prolonged the search for investors for a $54 million soybean crushing plant that St. Lawrence Soyway Company is planning for Massena, New York, near the border with Canada, CEO Doug Fisher said.

Fisher tried to win over investors worried by the trade war with charts and graphs showing how the conflict improved margins for U.S. crushing plants.

“These tariffs with China rattle them, when in fact they have increased crush plant profits,” Fisher said.

As of Wednesday, the company had raised about 85 percent of the total, Fisher said.

St. Lawrence Soyway’s plant is projected to process soybeans into feed for dairy cows. The livestock industry has also been hit by Chinese tariffs on dairy products and pork, though.

“As those farmers are not doing as well, their ability to buy meal at higher prices is not there,” Fisher said.