USA bean production and exports/
“More acres – that’s the name of the game this year”

Dylan on what's new at North Central Commodities

• Since Mexico had such a disastrous crop in 2023, we have been incredibly busy – our exports went phenomenally this year. We've been completely sold out of our processing plants since around March, so we’ve been shut down and waiting for the new crop. It’s allowed us to make a lot of necessary repairs, upgrades, and change out some equipment. Now the harvest is underway, we're back in the thick of it again.

• We also set up the Midwest Dry Bean Coalition, something people have been trying to do for 30 years, as our region represents about 65% of all edible beans in the country. It's a coalition between the Northarvest Bean Grower Association – which represents growers and farmers throughout North Dakota and Minnesota – and the private industry side, like my company, Trinidad Benham, Green Valley Bean, ADM – all of the processors. Ultimately the group is designed to represent the bean industry in Washington.

On…the US dry bean harvest

• Overall we're looking at average crop yields in the US this year, but acres are up. Michigan acres were up around 20% for black beans, but navies were fairly steady and I think they are going to have an average size crop. They had a little excess moisture in a lot of areas and early cold weather, so I don't think they're going to have a bumper crop, but it'll be good.

• In North Dakota (ND) and Minnesota, acres of the name of the game this year. The crop yields are going to be fairly average, but acres are up and that's what's really affecting production totals. We had very high prices this past year due to the 2023 crop failure in Mexico, which meant competitively priced forward contracts for growers this year – particularly in pinto beans in black beans. 

• With subdued prices for competing crops like corn, wheat, and soybeans (soybeans being the number one competitor in ND) and farmers saw an opportunity and flooded in some acres this year. ND was up about 30% in pinto beans YoY, which is a slight overproduction but we were at a shortage coming into the harvest, so it's welcome and will bring prices down. 

• Acres for black beans in ND and Minnesota were up around 60% YoY, which is why we are seeing a national increase of around 40% – I believe this year's acreage is the highest in the last 10 years at the very least. There is going to be a slight overproduction on black beans, but it shouldn't be a significant problem as Argentina is out of the market – it'll bring the prices back down to a more normal level.

On… black bean supplies

• I don't think it will be problematic as there will be solid demand, but we definitely overproduced a bit this year and will have enough black beans in North America to create a larger than normal carryover. Normally on black beans we tried to have a national carryover of between 500,000–800,000 CWT (25– 40 KMT), but some forecasts have us carrying over between 1.5 million-2 million CWT (76–101 KMT) going into next year.

• We’ll eventually get through those beans, but we’ll need a reduction of acres next year. The market kind of drives itself by being a cash market, so when you do end up in a supply driven year like this, it just takes time to eat through stock because we don't have industrial use for dry beans, and consumption doesn't vary greatly when prices change.

On… pinto bean supplies

• For pintos, I also think we'll have an oversupply early on, but exports are going to be high in the early period and I think we'll see a lot of beans leaving the country to markets that are going to consume them right away. I expect the market might get a little depressed due to oversupply around harvest but that should start climbing back up. 

• I do think we're going to see significantly lower pricing than we've seen over the past two to three years. I doubt we'll see a carryover similar to black beans, given that pinto acres only went up around 30% nationally.

On…US exports to Mexico

• Last year, Mexico’s bean crop failure left a gaping hole that meant they were taking everything they could. As a result, the US got uncompetitive in some other markets like Central America, South America, and Africa where other buyers are. Argentina, Canada, and other competitors were able to have an advantage over us in some of those areas.

• This year, Mexico's crop is looking better – I was down there in mid-July and Durango looked a lot better than it has the last couple of years as it’s had rains from some of the tropical storms coming out of the Gulf of Mexico. I think they're sitting in a pretty decent situation, at least in the state of Durango and Zacatecas. 

• They are having issues in the state of Chihuahua due to drought, which will affect their pinto beans. I still think the crop will be a little below average, but it won't be anywhere near disastrous.

• Mexico has pre-bought a lot of US crops to cover the window until their harvest comes in late October/early November. This means they will take a lot of beans from the US in September, October, and November but after that I believe they’ll calm down quite a bit. They’ll wait to see what their crop looks like before purchasing anything additional for next spring. This means you'll start seeing a lot of the US looking back to other areas like Central America, Europe, Africa, etc.

On…farmers ‘big bet’ on a poor Mexican crop

• Farmers did make a big bet on black and pinto beans this year, but they did so off good fundamentals. Mexico pre-purchased a large amount of this year's crop between November–February with attractively-priced grower contracts, so growers already have a fairly good portion of this year's crop pre-sold at good prices. It'll be their excess product – whatever’s not under contract – that will have to be sold at lower prices.

On… Past and upcoming elections affecting the the dollar

• Throughout last year up to June, Mexico's exchange rate was between 16.5-17.5 pesos to the US dollar but then they had their election on June 1 and their currency started to weaken. Now we are sitting at around 19.7 pesos per dollar and we do start to see less value. All our contracts in Mexico are in US dollars, which means things have become more costly, and we do lose out in a year where the dollar is strong and the peso is weak. 

• We also have the upcoming US elections, which will be watched very closely. What happens on election day can have a huge effect on the exchange rates, and further softening of the pesos value could greatly affect the edible bean market.

On… the Argentinian bean crop 

• Mexico doesn't always allow free trade of beans with Argentina or Brazil, although in other years they have opened a certain quota of non-tariff permits to import beans from South America. They don't usually fill these quotas, and there are typically very few Argentinian beans and no Brazilian beans imported. This year they had the most Argentinian and Brazilian means I've ever seen in warehouses in Mexico. 

• Even though the quantities were much smaller than US imports, and for all intents and purposes the US ran out of black beans to export, the Mexican market was able to supplement with Argentinian beans, and in general making business relationships like that can lead to things in the future. It's definitely something we want to monitor to keep our competitiveness on the world market.