Yet Soybean prices aren't dropping.
Soybeans are fungible?
#3 | Posted by oneironaut
Oh sweetie, are you saying the farmers are losing their minds over nothing? Are you that stupid?
To answer your question:
Farmers are storing crops rather than selling at a loss.
With prices low and often below the break even point, farmers are putting their crop into storage rather than selling which is keeping prices from cratering. They tend to do this just above the break even point. And it can be done for months to years depending on storage conditions. But this creates a supply time bomb if prices don't increase at some point and limtis capital for farmers needing to purchase everything for next season. Storage is already getting full amd more expensive while demand is not coming back. At some point, they have to sell and that's when prices crater. (This is in most of the ag news if you googled it)
Why it matters:
A supply time bomb is coming and farmers know it will crater prices without increased demand.
All this storage creates a supply time bomb if prices don't increase at some point. Storage is already getting full and many farmers have to purchase seed, fertilizer, parts, and pay for other farm/field needs plus pay on loans or acreage rent. At some point, they have to sell and that's when prices crater.
Production costs have increased and expenses are coming up.
Prices may be steady now, but costs of production are going up on seed, fertilizer, parts, repairs, transportation, etc. due to the trade war. This means what was profitable last year, isn't even close to profitable this year. And farmers don't have the capital to bridge the difference even if prices remained steady.
Creditors can't be paid means you can't make it up with next year's crop.
Most farmers rely on credit. If they can't profit or even get close to breaking even, they can't pay the loans on equipment, land, buy seed, fertilizer, etc. and go bankrupt. There's no "next year will be better" when the bank forecloses or you can't afford the land rent or you can't buy seed or make repairs, etc. because there is no next year. Just like at the casino, you can win it back if there is still money in your pocket but you can't even play if you don't have cash for chips and a seat at the table.
Even if there is a next year, crop prices will remain below break even due to a domino effect.
If farmers stop planting as much soybean to get back to a break even point and plant other crops, we just end up with a surplus of those crops and prices drop there. And this assumes some mass organized planning which isn't even possible currently because the White House doesn't care. This means 2025 survivors are in for a rough 2026. Worse, even farmers who break even may not be able to get credit or may face higher interest as lenders see higher risk.
FEAR NOT, FARMERS! JD Vance's company created ACRETRADER so you can sell your farm land for pennies on the dollar to corporate America while JD Vance takes a cut! WELCOME TO FARMAGEDDON, SUCKERS!
