Stink Bugs are Making Soybeans Smell Sweet
As the Asian carp work their way up the major riverways of the nation while kudzu chokes off the southern states and zebra mussels wreck havoc on the Great Lakes, there's yet another invasive species from halfway across the world that's pouring it on to the ecosystem: stink bugs. The brown marmorated stink bug, an insect that's as ugly as it is smelly as it is destructive, has descended upon the crops of the eastern seaboard, affecting huge swaths of agriculture from Pennsylvania to Virginia. While the stink bug can be a huge stinky menace to farmers, it has the very real potential to eat up a major part of this year's soybeans harvest and deliver up the sweet smell of money to investors who buy into the crop before the bugs hit.
Pest Control, Or Lack Thereof
The first indication of the stinkbug's presence in North America came some time in the late 1990s, but never became a problem that merited attention by scientists and farmers until about a decade ago, when an explosion of bugs (possibly tied to the cicada population cycle) began to first tear through Pennsylvania and then proceed to radiate outwards into the east coast and the midwest. Today, these brown stink bugs can be found in almost all of the lower 48 states but have only reached nuisance proportions in the area between New York City and Norfolk. The bug hopped across the ocean from China and Korea, where it terrorizes farmers fields but has a number of natural predators to keep numbers down. Here in the United States, the birds and spiders don't find the brown bug particularly appetizing, making it swell to huge numbers and attack crops wherever it finds them. While the brown bugs positively love apples above all else, they're content to graze on whatever green leafy foods happen to be closest at hand. They're rather fond of soybeans, a convenient food source to be found along east coast farmland. While brown stink bugs can also eat the weeds that affect soybeans, they're much more likely to nibble of the beans themselves, either consuming the entire contents of the pod or ruining the insides with the distinct brown mottling of their bites. The impact on the soybean crop writ large shouldn't be understated, especially if the insect can sweep south into major growth regions like Texas and Oklahoma, where soybeans have become popularized.
The best solution to eliminating the tiny brown bugs -- let them die during winter -- becomes complicated by their intelligence and capability to find warm environments. The cold winter snaps that have killed off the emerald ash borer throughout the Great Lakes regions will have less of an effect on the brown stink bug because it prefers not to live outdoors. These stink bugs take up residence in people's homes during the winter months, migrating from the outdoor food source to an interior where they prey on everything from houseplants to fruit bowls, with the stink glands needed to frighten off house spiders that would otherwise dispatch them. Entomologists have seized upon a number of grants from agricultural companies to develop an insecticide that targets the stink bugs, but no silver bullet has emerged. Unlike traditional crop pests like aphids, these stink bugs not only resist organophosphate chemical sprays but can scramble out of the way of a crop dusting, making it necessary to use higher-concentration pesticides with more frequent sprayings to tackle a severe infestation. At the moment, the only defense against the brown bug appears to be planting "trap crops", juicy fruit stands that attract the bug so that it does not feast on soybeans instead. Yet this method cannot turn the tide of the brown bug, and indeed facilitates further generations of breeding. The end result is a problem without a solution on the horizon.
The presence of such bugs poses bad news for your average farmer looking to feed his livestock, but promising news for soybean investors. The needle has barely moved for soybean commodities, trading just $12 lower today than the price during September of last year. An above-average harvest in 2014 kept the crop from gaining much traction at the same time that inexpensive foreign corn and wheat put pressure on soy as thrifty buyers looked for cheaper grain or foodstuffs. The hotter and drier summer of 2015 further amplified the bug's growth cycle, meaning that the upcoming harvest during the fall months is sure to disappoint everyone except investors who will capitalize from the steep drop in supply.
- The Takeaway: bad news for soybean farmers means good news for soybean investors. Just as failing crops around the world have forced a sudden bull market, so too will the impact of the brown stink bug on soybeans push the commodity's value upwards. As the United States leads the soybean harvest by a wide margin, furthermore, with nearly as much as the next two nations combined, the stink bug's impact on eastern-seaboard farms will reverberate through the agriculture market. Buy into soybeans to capitalize on this value prior to the harvest weeks (usually the end of October) to gain from the bug's destruction.
- While it's hard to predict the weather from a day out, let alone a year, meteorologists suggest this winter will see an El Nino cycle with warmer temperatures and greater precipitation. That should make the bug an aggressive presence throughout 2016 as well as 2015: investors can long soybean prices for delivery 12 months from now in order to capitalize on next year's harvest as well as this year's.