When soybeans climbed the mountain and reached $12 a bushel in 1973, brooms swept granaries clean.
The world — far better for grain and worse for inputs — was out of whack. OPEC, an organization of 12 oil exporting nations, took drastic action to boost crude oil prices.
OPEC, dominated by Arab oil producers, announced an embargo to target the United States and other nations that had sent military aid to Israel during and after the 1967 Yom Kippur War.
They began an embargo on Oct. 13, 1973, and within six months, oil prices quadrupled, creating long lines at gasoline stations and sparking inflation that mushroomed.
Farmers dealt with input price spikes. Baling twine doubled in price and it and other products were suddenly in short supply. The same condition even hit the anti-freeze supply, which prompted the Nixon administration to reassure the public that their needs would be met.
The embargo ended in March 1974, but oil prices never fell back to pre-embargo levels. By 1980, crude oil cost 10 times more than it did in summer 1973.
Farm commodity prices started to surge in 1971 and the strong market peaked in 1974. A sharp reduction in the value of the dollar, growing export demand and worldwide weather problems were root causes.
The 1972 U.S. crop year was poor and surplus stocks dwindled due in part to increased set aside acres. Congress responded with the 1973 farm bill, which was notable for several reasons.
The Agriculture and Consumer Protection Act of 1973 used target prices and deficiency payments to support farm income, cut grain forfeitures to the Commodity Credit Corporation and, for the first time, established a disaster aid program and a disaster grain reserve. The legislation also made history by creating the Rural Environmental Conservation Program.
Farmers may not have been aware of farm bill specifics when bins were cleaned out for the incoming crop. What was known is that beans were nearly worth the weight of gold.
Chasing a market high became a sport for some. A farmer in our neighborhood said he wouldn’t sell a bean until the local elevator offered $15. It seemed like he might well get it at the time, but his lofty goal was beyond his grasp. His soybeans were still in storage a couple years later and prices were much lower.
The soybean market high in 1973 was $12.11 per bushel and would not reach that level again until 2007 when farming’s latest “golden age’’ was in its infancy.
My brothers, who were young and aggressive at the time, purchased a new tractor — a diesel Allis Chalmers 190XT, which at the time was massive in size and horsepower. It had 93 drawbar horsepower and came with turbocharger.
The 2019 soybean crop, which has been hindered by a late spring, overly abundant rain and resulting increased weed competition, remains an unknown.
The August U.S. Department of Agriculture’s crop report estimates that farmers will harvest 3.3 billion bushels of soybeans this fall, which is higher than many other forecasters expect.
Dry weather in Brazil and Argentina may give the market a much-needed boost. Back in the early 1970s, those nations weren’t major soybean players. As I recall, back then the anchovy harvest had greater influence over the market.
I couldn’t understand how a fish and soybeans were in any way related. I later learned that anchovies offer a great deal of protein and thus are in indirect competition with beans.
Dad held firm to the belief that there was something fishy about the Chicago Board of Trade, which he thought conspired to hold commodity prices down. There was something wrong, he said, about suit-wearers who couldn’t tell the difference between a kernel of corn and a soybean setting prices while farmers had no say in the matter.
The traders in Chicago weren’t the enemy. We emptied every bean from the granary in the heady harvests of the early 1970s.