ASA, NCGA Press for Trade, E15 Markets

DECATUR, Ill. (DTN) -- With large crops and low prices, leaders representing corn and soybean farmers are pressing the need for more demand for their crops, whether it is selling more biofuels or re-establishing export sales with China.

Leaders from the American Soybean Association (ASA) and the National Corn Growers Association (NCGA) at the Farm Progress Show this week found themselves in constant conversations about market conditions and what it will take to turn around the economic challenges they face.

Asked about the prospect of aid payments, farm leaders described potential ad-hoc government payments as a "Band-Aid on a gushing wound" that won't solve the underlying problems.

Each group sees a different need for their crops.

ASA is pressing the Trump administration to reach a trade deal with China. The lack of China buys for the 2025-26 crop year leaves a gaping hole in demand that can't be replaced.

NCGA wants Congress to approve year-round E15 before the end of the year. Corn exports are already strong, but E15 legislation would greenlight ethanol producers to increase their production.

FINANCIAL CHALLENGES ACROSS CROPS

Matt Frostic, a farmer from Applegate, Michigan, and an NCGA board member, said he has been getting calls about input prices for next year's corn crop. "That is just as disheartening as it is to look at the low corn prices," he said.

The National Corn Growers Association this week released a series of reports looking at corn production costs. The reports compare how input costs have risen compared to the price of corn, as well as the impact of inflation. Production costs, for instance, hit a record average of $928 an acre in 2022, but have only come down about 3% since then, NCGA noted.

"Inputs are kind of structured in a $7 market, and we're in a $3 to $4 market," Frostic said. "Obviously, that makes it difficult to do profitable things when the structure is built that way right now."

Scott Metzger, a farmer from Williamsburg, Ohio, and a vice president for ASA, said his area of Ohio suffered a drought last year that brought down production. The lower production has been compounded with the current low prices. Farmers in his area have seen their working capital eroded, he said.

"It's tough, and working capital is something that takes a little bit of time to build back up," he said. "You just don't do that overnight."

More farmers are starting to express concern about their current operating loans and getting financed for next year's crop.

"There's definitely a sentiment in the farm community and in a lot of areas across the Midwest," Metzger said. "That's definitely getting talked about. I mean, the bottom line is there will probably be people farming this year that won't be farming next year."

Frostic credited Congress and the Trump administration for passing a stronger safety net for commodity producers, though those price supports won't kick in until fall 2026.

"While we're appreciative about getting that policy across the board, we've got a crisis right now to work on and deal with this fall," Frostic said. "We're going to get to where we are profitable again, but it's going to take some time."

CHINA WAITS AS BEANS RIPEN

ASA wrote a letter to President Donald Trump and leadership within the administration last week, basically making that point. The letter also included an analysis of soybean production and demand.

"Really, the main purpose was to call attention to get a trade deal with China," said Steve Censky, CEO of ASA. "For soybean growers, the Chinese market just simply cannot be replaced by someone else."

The administration should be commended for bilateral frameworks to expand trade with other countries. Still, the European Union, South Korea, Japan and Indonesia are already large markets for U.S. soybeans "with limited potential upside because they are already importing a lot of their needs from the United States," Censky said.

China imports more than 100 million metric tons a year. "You simply cannot replace a market that large," Censky said.

"If we can't get a deal with China, there will be a need for aid," Censky said. "Very frankly, we at the American Soybean Association and every soybean farmer that I talk to would much rather have markets than a check from the government."

Deputy Secretary of Agriculture Stephen Vaden on Tuesday suggested the Trump administration is looking at a "bridge" policy or program to help farmers until higher farm program payments go into effect in fall 2026.

Metzger said a bridge loan or payment would only help so far. "You're putting a Band-Aid on a gushing wound. It helps, but it's not the answer."

The problem, however, is that China understands the effect it is having by holding back on buying U.S. beans in the latest trade dispute. "I don't think they have any desire at this point to do business with the U.S.," said Stephen Nicholson, global sector strategist for Grains & Oilseeds with Rabobank.

Right now, China is "putting all of its eggs into the Brazilian basket" and may only look at buying from the U.S. if absolutely necessary, Nicholson said.

As the trade war continues, Nicholson said Chinese officials are willing to take some economic pain to make a point. Meanwhile, China is also making more overtures to the European Union, South America and India to buy Chinese products.

"So, right now, they are willing to kind of wait these tariffs out before they would negotiate," Nicholson said.

Another dynamic facing the U.S. with soybeans is that U.S. stocks might be contracting, but the world is "awash in oilseeds," Nicholson added. "The U.S. is probably going to be a little less competitive in the global market for a while until we build our supplies."

FINALLY TIME FOR E15?

Kenneth Hartman Jr., an Illinois farmer and president of NCGA, said the U.S. is falling behind in ethanol blends with Brazil selling E30 domestically, while Japan and India are looking at going to 20% ethanol blends

"Right now, it's all about creating demand and getting that E15 bill passed," he said. Hartman added, "We definitely have got to get to the higher blends of ethanol."

Hartman also reiterated the importance of expanding markets versus receiving another aid payment, though he added that such payments may be critical to keeping some farmers in business.

"We have farmers that are going to be hurting, so there is a possibility we might need some money again," he said. "But a payment is kind of a Band-Aid. It helps us for this year, but we need to fix the problem, and that's how to create new markets."

Geoff Cooper, president and CEO of the Renewable Fuels Association, said he believes there is synergy and legislation options to finally get an E15 bill this year. Late last year as Congress was passing a budget extension, an E15 provision was pulled from the bill when Elon Musk complained about the size of the bill.

"There are going to be some things happening this fall that provide an opportunity," Cooper said. "And there is still strong support for getting it done. A lot of our friends in Congress are more motivated than ever because of the way things went down in December. A lot of people got burned on that."

There is also a growing recognition that crops face a demand crisis with the forecast size of the crops, including a record corn crop.

"We certainly have a mountain of corn coming at us this fall, and the quickest way to boost demand -- the low-hanging fruit -- is expanding the market for ethanol, and the way to do that is year-round E15. That's something Congress can do to help," Cooper said.

Ethanol backers also have their eyes on California. While California is a leader in selling E85, state law actually does not allow sales of E15. Cooper said the California Legislature appears ready to pass a bill that Gov. Gavin Newsom backs.

"So, opening that market to E15 would be a huge deal for us, and one reason for that is they don't have the summertime barrier that other states have, so you can sell E15 year-round in California," Cooper said.

Also see "Deputy Secretary: USDA Eyes 'Bridge' Policy for Farmers as Crop Prices Remain Low" here: https://www.dtnpf.com/….

Chris Clayton can be reached at Chris.Clayton@dtn.com

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