74 / SEEDWORLD.COM JANUARY 2019 places, you couldn’t even sell soybeans at $6 per bushel at harvest.” Basse said when you look at who is going to be impacted the most, it’s growers in the Northern Plains. They ship soybean through the P&W, and those markets are now gone. “The other thing that’s changing after what I call the ‘Trump Trade Tariffs’ is who is holding the residual supply of soybeans,” Basse noted. “If you think about South America, Argentina use to be the residual holder, but that’s changing. “Sure, farmers there had a drought last winter but they are now exporting to China. They are destocking those silo bags throughout much of their country.” In the United States, year-end stock totals were forecast at 650 million bushels but due to the impact of the proposed tarrifs, that’s since jumped to 955 million bushels, according to the most recent USDA World Agricultural Supply and Demand Estimates. “We think at the end of the year, if U.S. trade tariffs are not lifted, U.S. soybean ending stocks could exceed 1 billion bushels,” Basse said. With those kind of stocks, Basse noted it will take the United States several years to destock before those on the farm can see the start of the next agricultural bull market or revolution. “I am a free trader … Our futures are tied to better trade throughout the world going forward,” Basse said. “I do not want to be political with this statement. I just want to say that I think free trade helps the world and helps the world economy.” U.S. MARGINS COMPRESSED, THE WORLD EXPANDS SOY PRODUCTION U.S. soybean Farmers Often Receive Lowest Profit Among Selected exporters (Based on “Benchmark” Farm cost/returns for 2012-2016) Profit($/Ac) -$15 -$0 $15 $30 $45 $60 $75 $90 $105 $120 $135 $150 $165 2012-14Avg 2013-15Avg 2013-16Avg ThebigchangeinBrazilprofitabilityis duetoa24%declineintheaverageprice receivedfromthe2013-16periodtothe 2013-2016period? Argentina Brazil Russia Ukraine US 7.5 billion is the current world population. 2054 is the year expected for the world population to reach 9 billion. 955 million bushels is the forecast for U.S. soybean ending stocks. 6% is the U.S. farm lending rate, the highest since 2010. While China is a big buyer of soybeans, their stockpiles of corn and wheat don’t impact world prices. Today, Basse said China holds about 61 per- cent of the world’s corn and wheat stocks. This, he explained, is the result of giving one price to farm- ers that is far above the cost of production. “Several years ago in China, you could produce a bushel of corn guaranteed at $9 per bushel. So if you’re a Chinese farmer, what do you do? Produce as much as you can.” But under rules of the World Trade Organization, China can’t export that corn because of the subsidies provided to its farmers. Because of that, Chinese corn stocks rose to dramatic levels, Basse said, and their government is now turning those stocks down. The Chinese government is changing its farm programs so that the price of corn today is somewhere closer to $6.70 per bushel, not at $9 per bushel, he said. In 2018, the Chinese government auctioned off 102 million metric tons of corn, Basse said. Furthermore, China is starting an ethanol pro- gram that will burn 45 million metric tons of corn a year. Basse said this is going to be big sometime in 2021 or 2022 when China returns to the world as a corn importer. Basse explained that it’s important to recognize what China does and does not have, even though their stocks are not available to the market. Shifting to the rest of the world, Basse spot- lighted two periods of time: the 70s and 80s when the Russians came into the market and the first GRAPH: AGRESOURCE COMPANY.