After becoming the hot new crop in parts of Canada’s prairies, soybeans are starting to lose their appeal as Donald Trump’s trade war with China drives down prices.
Soybean acres in Canada are poised to drop for the second straight year as farmers shift acres to more profitable crops. In addition to the price concerns, some growers are also worried that demand for the nation’s supplies will wither if China and the U.S. eventually strike a trade deal.
“I’m probably going to switch into some oats and barley and maybe a little bit of canola and wheat,” said Bill Campbell, the president of Winnipeg, Manitoba-based industry group Keystone Agricultural Producers. He’s slashing soybean acres by 67 per cent on his farm in the southwest part of the province. “We’re seeing a significant drop in price when we get them to the elevator. It boils down to economics.”
The soy snub comes after a decade that saw acres of the oilseed double across Canada’s prairies, making the nation the fifth-largest global exporter. The conflict between China, the world’s top soybean consumer, and the U.S., the biggest shipper behind Brazil, gave growers like Canada more opportunity to grab a bigger slice of the global market as traditional buying patterns shifted. Canada’s exports to China tripled in November from a year earlier to an all-time high, according to government data.
Now, prices are dropping at Canadian grain elevators as the South American harvest gives China more options. Spot soy price in parts of Manitoba has slipped 10 per cent in the past 12 months, according to data from Farmers Advanced Risk Management Co.
China is also working to lower its use of the oilseed. At the same time, the spread of the pig-killing disease African swine fever means that some of the country’s hog producers have been forced to cull herds, further threatening the outlook for soybean use in livestock feed.
Canada’s soy acres could tumble three per cent as farmers shift back into canola, the nation’s agriculture ministry said in a January report.
Weather problems have also discouraged farmers from soybeans, said David Reimann, a market analyst at Cargill Ltd. in Winnipeg. Dry conditions in parts of Saskatchewan and Alberta for the past two seasons sent yields tumbling, and growers are able to get better returns per acre by planting canola, he said.
“If there is a settlement between the U.S. and China, some of that demand will shift back to the states,” Reimann said. “There’s some caution on the farmer’s part on how that will play out.”