ISA partners with Cargill for farmer roundtable

March 21, 2024 | Kriss Nelson

Opportunities and challenges facing the soybean industry in 2024 and beyond were among discussions held during the Iowa Soybean Association (ISA) and Cargill Roundtable held recently in Fort Dodge.

The state of soy

Kirk Leeds, ISA CEO, was joined by Laura Hatcher, U.S. soybean merchandising leader for Cargill, to discuss the challenges facing Iowa soybean farmers this marketing year and beyond.

Despite the continued decline in soybean prices, some positive aspects of the soybean industry are showing up.

“The reality is the world needs more soybeans,” says Leeds. “There is a lot to be proud of. The United States produces the most sustainable soybeans in the world. There is good global demand for soybeans and increased crush capacity in the U.S. There are some real positive trends, but there are clouds on the horizon.”

One of those clouds is Brazil, as they continue to clear land dedicated to growing soybeans. Leeds says the country is also working its way to becoming a competitor for U.S. corn.

“Within five years, it goes from brush and the worst soil you can imagine to producing 72-bushel soybeans,” says Leeds. They can produce a lot of soybeans very quickly, and that is going to continue. They have so many more acres to convert potentially.”

China buys 60% of the soybeans traded worldwide. Prior to the trade wars in 2018, the United States was a major supplier of those soybeans. A piece of the market we have not recovered.

“Brazil is filling the void,” says Leeds. “Brazil is real; they have challenges. It is not all roses down there, but they will certainly continue to be a major competitor.”

Hatcher discussed some challenges farmers face and how they can best position themselves.

When considering recent challenges, she referenced the past 12 months soybean prices, including the spring crop insurance projected prices settling for soybeans at $11.55, down more than $2 from last year, and input pricing down very minimally.

“Soybean prices have dropped by $2 a bushel, and inputs for soybeans following corn only dropped by a quarter,” Hatcher says. The farmers in this room know far more than I do—that will be a challenge. We are in the window of where prices are going to reset, and we are seeing that on the commodity side, and we will have to see that on the cost side over the next couple of years.”

Diversifying a marketing game plan could mean success.

“It is easier to stay in the spot market and sell grain with $13 to $14 a bushel soybeans, but when we are talking $11 possibly going down to $10, we have to focus on when I need to move grain. What levels am I profitable and trying to work with someone to develop a marketing grain plan and stick to it as much as you can while adjusting for whatever new inputs enter the marketplace.”

Regarding opportunities in the marketplace, Hatcher is looking toward sustainable agriculture.  

“We are seeing more sustainability programs come into the marketplace, and all of that comes back to the farmgate,” she says. “Cargill has a regenerative agriculture program, RegenConnect, but we also have some more specific targeted programs for what different countries and consumers want. For farming practices to be changed, you must financially incentivize the farmer. We will continue seeing more opportunities in that space, impacting a farmer’s bottom line.”

Leeds agreed.

“I couldn’t be more excited about the opportunities in agriculture and soybeans, specifically,” he says. “We have great opportunities to fill and meet the needs of our customers worldwide. Through the Soil and Water Outcomes Fund, we are working with four of the five largest food companies in the world. We are on a journey together to bring resiliency to the supply chain and more value to our farmers. The future is very bright. We are working hard with farmers' input and support to meet those challenges, and we will be growing soybeans in Iowa for a long time.”

The Soil and Water Outcomes Fund (SWOF) is managed by AgOutcomes, a subsidiary of  ISA. SWOF is an inset program that creates new market opportunities and revenue streams for farmers through partnerships with public and private organizations. They provide financial incentives directly to farmers who begin or expand on-farm conservation practices that yield positive environmental outcomes such as carbon sequestration, emission reductions, and water quality improvement. Visit www.theoutcomesfund.com to learn more.

Biofuels update

Matt Herman, ISA’s chief officer of demand and advocacy, and John Buboltz, oilseed processing training leader at Cargill, contributed their thoughts on the biofuel industry's present and future state.

Herman pointed out several opportunities on the horizon for policy surrounding biofuels, which include:

• Cellulosic biofuels demand. “The Renewable Fuel Standard continues to have a robust cellulosic biofuel demand,” says Herman. “Let’s not forget, the Environmental Protection Agency still has the congressional mandate to grow the cellulosic biofuel pool.”
• Although there have been some failed attempts at the production of cellulosic biofuel in the state, there could be a second renaissance in this area. One way, Herman explained, is through anaerobic digestors being placed alongside swine and dairy operations.

• California is set to significantly reduce carbon intensity (CI). “California essentially got a pushback from the entire industry telling them they are not stepping down this program fast enough. They need to bring down the compliance curb faster to spur prices,” says Herman.

• Clean fuel policy is spreading rapidly.

• Inflation Reduction Act (IRA) guidance will support investment decisions and prices. “I think IRA guidance, whatever that comes up to be, will support investment decisions,” says Herman. “Dollars are sitting on the sidelines to build plants and deploy things.”

When it comes to what feedstocks get used for biofuels first, soybeans are near the last.

“In the lineup for feedstocks, we start at the low CI feedstocks; things like tallow and used cooking oil will be used first, says Buboltz. “Eventually, we make our way to soybean oil.”

The increased import of used cooking oil weighs heavily on Buboltz's and others' minds—something he considers a “sensitive subject.”

It is part of the Renewable Fuel Standard policy to utilize used cooking oil for bio-based fuel production. However, there is some concern about an increased supply being imported into the United States.

“There are 200,000 tons of imported used cooking oil coming into the U.S., and that is not beneficial to U.S. growers,” says Buboltz.

The growth of imports has grown drastically from 50,000 tons.

“When you are growing at such a rate, there are a lot of questions that have to be asked,” says Buboltz.

Without a proper auditing process, Buboltz fears oils such as palm oil or sunflower oil, both of which are not part of the RFS, could be blended with used cooking oil.

“I am not pointing fingers and saying anybody is doing this; it just leaves the door open for it to happen,” he says. “I believe used cooking oil should be used, but we need traceability. We need to get to a point to validate it. I think a lot of work will have to be done in the industry.”

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