Soybeans are having an incredible year. That’s bad for prices.

Everything seemingly went right for growing soybeans this year, which is why prices are going all wrong. Soybean futures are near 4-year lows and down about 45% from its 2022 peak. Corn is also in a similar boat.

The U.S. is in the midst of a farm slump right now, despite very high yields for the country's two biggest crops.

Earlier this year, the U.S. Department of Agriculture projected net farm income would drop 26% in 2024, affecting not only the farmer but also businesses that rely on the farmer's income, like John Deere and Kinze. Deere expects its North American sales to continue to slump. This summer, the company has laid off hundreds of salaried employees.

For a detailed look at what led to the low prices and how farmers may adjust, Straight Arrow News interviewed Damian Mason , host of "The Business of Agriculture" podcast.

This interview has been edited for length and clarity. Watch the full interview in the video above.

Simone Del Rosario: Damian, why do we have such high soybean yields this year?

Damian Mason: First off, farmers in America are very, very good at doing what they do, which is produce commodities. We're remarkable at it. On a trend line — granted, there's been some down years, we're on a trend line — every year, our soybean production goes up about a bushel per acre, eight-tenths to one bushel per acre.

We're going to put out about 53 bushels per acre. When I was in high school, we were at about half that. So 53 bushels per acre put on 86 million acres means a whole heck of a lot of soybeans. We're going to be around 4.6 billion bushels of soybeans produced in the United States of America this year.

Favorable weather patterns; technological advances; the machinery is so good, you mentioned John Deere; the ability for us to get the right seeding population, to get it at the right soil planted depth, to use the right fertility at the right time; it's just amazing compared to where we were just a long time ago.

As an agricultural person, a farm boy, I always point out, remember, environmentally, we're doing this with [fewer] units of natural resources per bushel produced than we ever have. So we're just really good at making bushels. The problem, of course, is we don't need all these bushels.

It's just a situation where we're probably in an oversupply situation. And that's what happens with commodity production. The cure for low prices is low prices. The cure for high prices is high prices. You're kind of seeing that this year.

Simone Del Rosario: And exports are up this year, so it's not that we're not exporting as much. It's simply, as you said, these yields are pretty incredible and we've seen really favorable weather conditions. How are farmers adjusting to this reality?

Damian Mason: Some are going to, unfortunately, put their head in the sand and say, 'Oh well, you know what? This will all be fine. It's just a blip.' Some people like me out here with the agricultural economics angle, have pointed out [a different trend].

I just pulled something [I printed off] almost a year and a half ago. This is a stat from the United States Department of Agriculture, and it's from the end of year 2022. China was our No. 1 agricultural customer in 2022 with $36 billion of agricultural products bought from the United States. They're going to be about half that this year.

So what we've got now is a very ascending productive capacity in soybeans, 86 million acres planted and harvested, whereas just 30, 40 years ago, we might have been around 60 or 70 million [acres]. So we've got a bunch more acres, growing a bunch more bushels per acre. And we did that, we were conditioned to do that in agriculture, to supply the new China tiger, this whole thing about China over the last 20 years.

The problem is China's plenty supplied. Brazil ramped up production. Argentina ramped up production . Other Asian countries ramped up production, as well as us. So we're in this situation.

What are farmers doing to adapt? Well, they could switch acres to something else, but with 86 million acres planted, it tells me they didn't switch off many acres. They could also figure out new ways to sell their product, and that's where biodiesel is going to come into effect, although that's more government-driven than farmer-driven.

Simone Del Rosario: You were on a farm recently where they had said, forget about the soybeans. We're going to be grazing cattle on this land. Can you tell me about that?

Damian Mason: So think about this, Simone. Soybeans were not really much of a crop until post-World War II in the United States. They were grown in Asia 1,000 years ago. But they didn't really come into mass acreage, broad acre production here in the United States, until really the 1950s.

So we're going to have 86 million acres. That's almost 1/4 of our total cropland acres in the United States, just to put that in perspective. Corn is about 90 million, soybeans are about 90 million, those two commodities occupy about one half of all cropland, food producing acres, not counting rangeland and grassland.

So the intriguing part of that episode, that video that you saw , my friend Kelly Garrett in Iowa, a large-scale farmer, also has cattle as well as a cropland. He ran the numbers with his consultant financial adviser on the farm, and he said, 'We've retooled what we think our cost of production is on these soybeans, and at $9 soybeans, which is where we're hovering right now, a little over $9 per bushel, we think we can make more money by putting a mix of cover crops and forage crops on these fields and putting cattle on them.'

Right now, beef prices are still pretty high. The consumer's still paying for steaks and cheeseburgers and so there's a little bit of a shortage of cattle. So he says, 'What if I took some of my acres out of soybean production and plant it to an array of forage crops, and then turn the cattle in there, intensively grazing it.'

You're not talking about one cow per acre. You're talking about a bunch of cows per acre and moving them, maybe two times a day, and really maximizing that. And it looks like that's going to work.

Most people wouldn't think that you could do that in Iowa. They would say, 'Oh, soybeans in Iowa all day long trump cattle.' But you know, it looks like the cattle are going to make more money per acre on some of his fields than soybeans.

Simone Del Rosario: That's certainly economic innovation on the farmer's part to to make that type of dramatic transformation. But to your point, a lot of other farmers are holding out hope. Do you think that, with this 4-year low in prices, do you think there will be a turnaround? Obviously, low prices cure low prices. Are we going to see fewer acres of soybeans planted in the following crops?

Damian Mason: Most of the hope is hinged on this. I pulled up a couple of things in some agricultural media. This one right here is a big one. United States Department of Agriculture announces $99.6 million, almost $100 million, for biofuels and clean energy projects.

You've heard about ethanol. Ethanol is in its 20th year now, generally derived from corn. We invented the Renewable Fuel Standard under the George Bush administration 20 years ago. There are approximately 190 ethanol plants that use corn as their feed stuff as their supply to make ethanol. Ethanol then goes into your gas tank. About 10%, 11% of everything that you burn in your tank, on average, is ethanol derived from corn.

Well, we're kind of looking at doing that with soy with biodiesel. We've had biodiesel products before. The new angle is to use the oil. If you crush a soybean, 80% of it ends up as soybean meal, which is best used to feed to a pig or a cow to make a pork chop or a steak. The 20% becomes oil. That oil would be required then to go straight into a refining process to make diesel.

So there's a lot of hope for a cleaner diesel, a less emission, a less pollutive diesel, derived from using soybean oil. Of course, then you're going to have a little bit of a glut of soybean meal, which makes a very cheap feed, which also might help bring down the cattle prices, because that would go then to the beef. So I think that's the biggest hope right there.

The idea that farmers are going to produce less; no farmer that you will ever meet says, 'You know what I want to do next year? I want to decrease my yields by 10% by doing a crappy job.' Most of them are saying, 'I want to go ahead and get more bushels per acre, and I want to be more efficient. I want to be a star producer.'

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