Bloomberg’s Hallie Gu and Clarice Couto reported that “just days before the start of the US export season for soybeans, the world’s top importer doesn’t appear to have bought a single American cargo for the coming year.”
“The impasse between China and the US — long its second-biggest supplier — comes as the two governments negotiate an end to the trade hostilities that have roiled commerce between the countries since Donald Trump returned to the presidency,” Gu and Couto. “American farmers have said the stalemate leaves them headed toward a financial precipice, but US government data suggests that Chinese buyers are standing pat.”
“China imposed retaliatory tariffs on US soybeans in March, making cargoes less competitive. The US harvest typically starts in September, which marks the shift from one export season to the next. Chinese mills that crush the oilseed into animal feed will usually book ahead to take advantage of the cheaper prices and ensure their needs are met for the first few weeks or months of the crop year,” Gu and Couto reported.
“The hold-up this time seems to be the trade talks that have been extended to Nov. 10, with Beijing in no mood to give up a bargaining chip,” Gu and Couto reported. “Although Chinese commodities purchases are just one aspect of the discussions, during the first Trump administration, soybeans in particular loomed large as a way to help close what the US characterized as an unfair trade deficit with China.”
Courtesy of Bloomberg.
“The market is highly seasonal, with American supplies dominating until the southern hemisphere harvest is gathered and shipments from China’s top supplier, Brazil, become available. That could in theory mean a shortage until the next wave of Brazilian beans is ready from February,” Gu and Couto reported. “The hope, of course, is that normal service will resume after Washington and Beijing strike a deal favorable to both their farming constituencies. But if that’s too tall an order, the consensus among traders and analysts is that Brazil should have enough old-crop stockpiles to cover the gap, while China could always tap its own huge reserves to meet its needs.”
Soybean Prices Falling Near or Below $9 in Some Locations
AgWeb’s Tyne Morgan reported that “farmers in the Northern Plains are facing cash soybean prices below $9, and with China absent from the soybean export market, $8 soybeans could continue to be a reality this harvest. In fact, Dan Basse, president and founder of AgResource Company, says the Chinese government is continuing to instruct Chinese importers to not buy U.S. soybeans. Until that changes, soybean prices are likely to remain low.”
“Similar to the previous trade war, it seems farmers are on the edge of the spear when it comes to the impact, with soybean prices sliding to levels well below break-even. With basis crashing, North Dakota seems to be hit especially hard. Just how low are prices?” Morgan reported. “In Maddock, N.D., basis is negative $1.65, with cash soybeans sitting at $8.83 on Tuesday. In Carrington, N.D., basis is negative $1.45, which brings the price to $9.03 cash.”
“At those levels, farmers are looking at losing even more equity this year,” Morgan reported. “The American Soybean Association sent a letter to President Trump last week warning of dire long-term economic outcomes for farmers if the country continues to not buy U.S. soybeans.”
(Note: This article was shortened. Source: University of Illinois Farm Policy News, https://tinyurl.com/2mswwkn9)
