Marketing the 2003 Soybean Crop
What's New That Might Help Shenandoah Valley Farmers

Farm Business Management Update, August/September 2003

By Robert A. Clark, Tom Stanley, and Jonah Bowles

Many Shenandoah Valley farmers have planted soybeans and are now hoping for a good crop. If you haven't begun developing a marketing strategy, now is a good time! The following article has been developed to provide some tips that might help Shenandoah Valley farmers optimize their soybean crop revenue.

What is New for 2003?

Due to the wet spring the acreage of soybeans that has been planted in the Shenandoah Valley is expected to be far less than normal. For example in Shenandoah County, actual planted acreage is expected to be 40 to 60 percent below normal. Farmers who have traditionally been forced to haul their soybeans to faraway markets may find local markets more receptive to buying their soybeans.

More local feedmills are using roasted soybeans. Hopefully, this practice will mean an increase in local consumption of whole soybeans. In the long run, this change should translate into a good opportunity for Valley-grown soybeans to be marketed locally thus saving the transportation cost of shipping them to faraway markets. However, actual use of roasted soybeans for livestock feed will be affected by the cost of roasted soybeans compared to the cost of other protein and energy sources.

Something else new for 2003 is that a portable roaster has been purchased in the Shenandoah Valley. This roaster adds a new dynamic to soybean marketing. The technology of a portable roaster is not new. Some Valley farmers have used the services of portable roasters out of Pennsylvania. Hopefully, a local portable roaster will ultimately be less expensive and more convenient than the portable roasters from out of state. Livestock producers needing roasted soybeans may want to consider storing raw soybeans and having the portable roaster come to their farm on a routine basis. Also, soybean farmers could store soybeans, have the roaster come to their farm, and service a market. Potential consumers for roasted soybeans include dairy farms, swine farms, small feedmills, and creep feeding calves. Soybeans do not need to be roasted for finishing cattle, mature cattle, heifers, or stockers.

Faraway Markets or Markets Close to Home?

If you ask farmers what they think about a specific market for any crop or livestock most simply shrug and ask, "What's the price?" The problem that we face with growing soybeans in the Shenandoah Valley is that the faraway soybean markets offer more marketing tools (such as cash contracts, advance pricing, basis contracts, etc.) than the markets within the Shenandoah Valley.

Clearly, these marketing tools need to be offered for delivery of soybeans within the Shenandoah Valley.

Should Valley Farmers Sell at Harvest or Store?

If you are considering storing soybeans for the first time or if you want to reevaluate storage cost, contact one of the authors for information. We developed a document titled "Evaluation of Cost/Benefit of Owning Grain Storage for Shenandoah Valley Farmers." Highlights of this paper include the following:

• Most references indicate that handling and storage shrinkage (both moisture and non-moisture shrinkage) can range from 0.5% to 2.0%.
• The example grain storage costs within the paper ranged from $0.16 to $0.40 per bushel (details are given in the paper).
• Selling grain at less than market moisture sometimes involves extra drying costs ($0.01 to $0.03 per bushel per percentage point) and always involves loss of water weight that could have been sold at the price of grain.

How Do I Find a Buyer?

Did you know that at least 10 entities will buy soybeans within 200 miles of New Market, Virginia? A list of buyers relatively near the Northern Shenandoah Valley has been developed. Feel free to call 540-459-6140 or e-mail raclark@vt.edu if you would like a list. Some of these buyers only purchase on a cash basis while others offer cash contracts on future delivery, basis contracts, and other marketing programs. You will need to call each one for details. As with selling any agriculture product, all buyers need to be scrutinized to ensure their ability to pay.

Marketing Directly to Livestock Producers

What kind of livestock can eat soybeans? The answer is that it depends on whether the soybeans have been heat-treated. Most soybeans in the Shenandoah Valley will either be roasted or fed raw. Therefore, our discussion is limited to these two options.

Raw Soybeans: Raw soybeans can be fed to beef cows, finishing cattle, stockers, and developing heifers. However, because of the oil content, the rate must be limited. Also, very limited quantities of raw soybeans can be fed to swine and dairy. Raw soybeans should not be fed to developing bulls or baby calves. One disadvantage to feeding raw soybeans is that if the soybean are ground, they can go rancid quickly. Feeding raw soybeans to cattle will likely not be a major market outlet, but it might help someone get good value out of those last bushels of soybeans that cannot be marketed otherwise. Anyone who is not experienced with feeding raw soybeans is encouraged to contact his/her local livestock Extension Agent to get information.

Roasted Soybeans: Roasted soybeans can be fed to lactating dairy, swine, poultry, horses, and many other types of livestock. Information is available on how to properly roast and feed roasted soybeans to all of these livestock types. Feel free to contact one of the authors for information.

Practical Tips

Raw soybeans can be sold and purchased on a per bushel basis. However, roasted soybeans should be sold and purchased on a per ton basis. Mathematically, a ton of raw soybeans with a test weight of 60 pounds per bushel is equal to 33.33 bushels. However, the roasting process will cause both dry matter and moisture shrinkage. In general, it will take about 36 bushels of raw soybeans to equal a ton of roasted soybeans. Since the amount of moisture lost by roasting will vary for each situation, these numbers should be calculated for each farm. We have developed a sheet to help farmers make these calculations.

During the winter of 2003, prices quoted on roasting soybeans ranged from $0.50 to $0.90 per bushel of raw soybeans. The average appeared to be somewhere near $0.70 per bushel of raw soybeans.

Whole roasted soybeans can be stored; however, they must be properly cooled first. Although no specific data are available on storing roasted soybeans, most people suggest grinding only the amount of roasted soybeans needed for five to seven weeks. Please note, ground raw soybeans do not store very well. Most people suggest limiting the storage of ground, raw soybeans to no more than one week (maybe slightly longer if it is mixed in feed or if it is winter).

Based on a telephone survey that we conducted in August 2002, about 200,000 bushels of storage capacity were available in Shenandoah, Page, Clarke, Frederick, and Warren Counties that could have been used to store the 2002 soybean crop. Soybean farmers considering storage should look around to assess the availability of renting existing storage. Some of this storage, however, may be in an undesirable location and/or have high maintenance cost.

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