After returning from Commodity Classic, the annual joint meeting of the corn and soybean associations, it's clear to me that growers are riding high on the bull markets. Corn prices are good and bean prices are amazing. Check out pages 28 and 30 for our marketing columnists' take on these bulldozer markets.
Walking among the more than 4,000 attendees at the Classic, I could almost hear the cha-chings as producers beamed over high market prices. By the way, if you haven't attended one of these meetings, do yourself a favor and plan to be at next year's event in Austin, TX, Feb. 24-26.
But even with the rosiest news, there's reason to practice some restraint.
For example, the soybean industry is currently running the lowest stocks-to-usage ratio in history, hovering at about 5%. Even in past bull markets, economist Rick Brock says domestic supplies have never been this tight.
And that's exactly what's got the American Soybean Association (ASA) on edge. With tight supplies going into summer and exports at a record pace, there will probably be a shortage of U.S. soybeans to feed the nation's livestock.
That shortfall will require soybean or soybean product imports — most likely from Brazil.
"Meal importation now is critical because livestock producers are our biggest customers,"says Ron Heck, ASA president. "U.S. soybean growers need U.S. livestock demand to be robust when growers harvest the 2004 crop."
Heck says the domestic supply is deteriorating daily and that many ASA farmer-leaders worry about meeting demand. Plus, it will be expensive to transport meal to livestock once imports do arrive. That just gives the livestock industry yet another reason to consider moving its operations to foreign soil.
Any imports, of course, stick in the craw of most farmers, especially since they could mean a direct pathway for Asian soybean rust to make its debut on American soil.
But the good news from a rust standpoint is that processing soybeans into meal destroys rust spores. Whole beans, on the other hand, can carry rust spores on leaves, stems and foreign matter for what could be up to 45 days.
A recent status of scientific evidence report by USDA's Animal and Plant Health Inspection Service (APHIS) states that "Asian rust could cause significant crop losses, ultimately resulting in widespread and complex market disruptions."
The report goes on to say that clean soybean seed, clean soybean grain and soybean meal are not pathways for the introduction of soybean rust. And that foreign materials found in soybean grain shipments are "unlikely" pathways for the introduction of soybean rust.
Regardless, Heck says, ASA's stance is clear: Imports should arrive only as meal, cleaned seed or cleaned whole beans. It is not wise to risk bringing rust spores into the U.S. with commodity soybeans until spore viability studies are completed.
"We've already been cutting back on exports so we have more available to the livestock industry," says Criss Davis, chairman of the United Soybean Board. "Our largest and most important customer is the U.S. livestock industry and we want to make sure our livestock producers are in business next year."
It remains a balancing act. While you're almost dizzy over prices you haven't seen in awhile, association farmer-leaders are working hard to fulfill the demands of domestic markets. At the same time, they're monitoring the regulatory front to assure farmers that any U.S. imports will be soybean-rust free.
For me, this is one of those wonderful examples of why associations are worth joining -- and supporting.