Soybean markets in 2024 and beyond

February 8, 2024 | Kriss Nelson

The Iowa Soybean Association’s Farm Forward event held last month was geared toward helping Iowa soybean farmers position their farm for success in 2024.

A panel discussion on farm income and market outlook dived into near and long-term market opportunities and challenges.

Brent Swart, ISA president-elect and farmer from Spencer, moderated the Q&A session featuring Mike North with Ever.Ag, Chad Hart, Iowa State University professor and extension economist and Alan Weber, founding partner of MARC-IV.

What should farmers expect from the soybean market as we look at 2024?

Hart expects prices for both soybeans and corn to return to normal.

“Crops and livestock markets had phenomenal years coming out of COVID,” says Hart.

But what goes up must come down.

“The problem is, when you get elevated prices, it tends to slow things down on the consumption side,” says Hart. “Has inflation the past two years slowed down the pace of spending? Yes it has. Not only in the U.S. but worldwide.

As we slowed down spending, we watched the export pace drop off because of higher prices, and now we are trying to figure out how to regain some of that market share, which is one challenge for 2024."

North says the past few years of dry weather in South America causing a shortened soybean crop is ending.

“Brazil and Argentina, by all indications, will come to the table this year. We have an increase in production, declining demand and with China, probably not the year they will step up,” says North. “There is a lot of downside pressure on beans as we move forward."

Weber looks to future relief with growth in soybean oil demand, with announcements of conversions in petroleum refineries to renewable diesel production behind some double-digit growth in renewable fuels in the past two years.

“Refineries, from a cost perspective, were not very competitive,” says Weber. “If you are sitting on a petroleum market out of position in cost and losing money and looking to shut a plant down or convert it to a renewable diesel plant, possibly make money, make institutional fronts happy because you are green is why we saw these conversions announced for refineries.

Soybean oil has been a premium in the United States. In the future, the demand for additional crush is not what is going on with trade and other issues, but what is going on in the renewable fuel space and what impacts it will have with additional crush in our backyards.”

Will an election year affect soybean prices?

“The presidential election matters less than you think they do,” says Hart.

This is because most of the policies are in place during transition.

For example, Hart says the soybean market, surrounded by the turmoil from the trade dispute with China over the past five to six years, resulting in tariffs being placed during that trade war, is still there.

“The idea of a presidential election moves the needle on some issues, but where I look for most change will be the trade front and climate-smart initiatives,” says Hart. “We are seeing different viewpoints between presidential candidates, and this could have more of a long-term impact than a short-term impact on markets in 2024 or 2025.”

An election year causes some uncertainty, Weber cautions.

“Brings out uncertainty in terms of crop insurance and demand and will push out one more year of uncertainty in the industry regarding demand for renewable fuels,” says Weber.

North advises farmers to watch the developments of a farm bill closer to the presidential election in terms of what it could mean in the short term.

“A presidential election doesn’t change things quickly,” says North. “The farm bill could. That is going to be more of a hot topic for us.”

What does the expansion of Iowa’s soybean crush capacity mean for the Iowa soybean farmer, and what are the potential risks?

Hart believes the risk will be more toward those investing in building the refineries.

“You think back to ethanol 20 to 25 years ago, we saw a lot of plants built, get up and running but under new ownership in five years,” says Hart. “We could replay that game in the new space today as we look at renewable diesel.

There is a stronger source of demand (for soybean crush) that helps the farmers, but as we look down the line, it goes back to how will consumers approach that diesel market? Will they soak up the renewable diesel we find a home for, much like how ethanol consumers created and have helped maintain that industry for the past 20 to 25 years?"

North says farmers will have to look at soybean crush as a new demand for their crop and rethink how they market.

“We have to move away from what I refer to as the Brazilian marketing model, where we sell raw soybeans to anyone with a checkbook, to an Argentina model where everything goes through a crush facility, and we sell the byproducts.

Going down this path, if you try to think about your local soybean market in five years the same way you think about it now, you are already wrong.”

North also believes Iowa soybean farmers will have different competition.

“As we move toward processing more soybeans, the competitive landscape will change,” says North. “Right now, you would consider the Argentinian or Brazilian farmer your competition as it relates to the global marketplace. That is going to change. It will be the canola or rapeseed farmers putting meal and oil into the same corridor.”

For Weber, the additional soybean crush with the potential of more renewable diesel produced creates new partnerships.

“We will use the same farmer cooperatives, but we are seeing a petroleum investment back into agriculture,” says Weber.

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