Agricultural reports released this week show strong demand domestically and decent demand internationally for United States soybeans. But, does the United States have what it takes to keep up with Brazil during such a volatile trade climate?
AUDIO: Brian Grossman, Zaner Ag Hedge
The U.S. Department of Agriculture (USDA) on Wednesday released its Grain Crushing report. Soy crush came in above market expectations. However, Zaner Ag Hedge market strategist adds the soybean complex remains under pressure due to ongoing trade concerns.
“We had President Trump speaking yesterday (Wednesday) about increasing the tariff rate from 10-percent to 25-percent on the $200 billion, so that fear factor is definitely there. However, they (soybeans) are well off of their lows as corn and wheat are somewhat dragging them higher,” Grossman said.
Brazil’s trade ministry reports increased soybean exports. The country exported 10.20 million metric tonnes (mmt) of soybeans in July, up 68-percent from a year ago, and recorded soybean exports of 10.42 mmt during June.
Brazil remains a strong competitor in the global soybean market. A lot of business will go to the country, as the United States works to resolve issues with some of its top trading partners. Grossman encourages U.S. farmers to remain hopeful, as he believes the market will find a short-term solution.
“There’s only a certain amount of grain out there,” Grossman said. “We all know that Brazil has a very big crop, but they are on the dry side. We have no idea what kind of global numbers we are going to be looking at for next year. If they produce a big crop, then we could be in trouble. But (if there’s) any kind of weather issue, then China is going to be forced to come back our way.”
USDA plans to release its monthly World Agricultural Supply and Demand Estimates next Friday. Grossman says the report will give the trade and producers a better idea of the export outlook.
“I’m really wondering if we’re not going to see it (exports) getting revised a little bit lower. We are a bit behind pace. If that would happen – they revised it up last month – they’d be backtracking just a hair. Not all that bad; still looking at over two billion bushels worth of exports,” Grossman said.