A trade war with China is now in full swing. The United States must continue to export grains, despite challenges abroad. A market strategist discusses the potential for U.S. soybean exports amongst tough times.
The U.S. Department of Agriculture on Monday released its weekly Grains Inspected for Export report. Zaner Ag Hedge market strategist Brian Grossman says exports are struggling, but not enough to cause concern.
“Corn, just shy of 1.5 million metric tonnes. Above what we need on a weekly basis,” Grossman said. “However, soybeans – not a bad number – (at) 650,000. A little short of what we need on a weekly basis. To reach that USDA target, we should be around 705,000. On the short side, but not anything severe. Wheat also coming in well below. Needing about 505,000 and coming in at 270,000. A bit disappointing, but we are in the new marketing year, so there is plenty of time for wheat to catch up.”
Roughly 150 million bushels of soybeans have yet to be delivered to China, as well as unknown destinations. However, Grossman notes other countries are purchasing the undelivered exports.
“(The) big question is, ‘Are they going to cancel on those?’ The potential is there. But, what we’ve been seeing over the last two weeks or so is a lot of the cancellations from China getting picked up by other countries. The one that really sticks out in my mind is Iran, two weeks ago, buying U.S. soybeans. There are other countries, that typically aren’t friends with the United States, finding value in our grains at these price levels,” Grossman said.
Grossman believes soybean exports will still fall short of USDA’s goal, but thinks cheaper soybean prices will motivate enough sales to maintain export demand.
“I do think we are going to fall short of the USDA’s goal on exports. But, we are trading at $8.70. A 10-year low on soybeans should be attracting some kind of business. There’s going to be a lot of countries that are going to have a hard time saying no to the U.S. strictly because of trade conflict. These prices are very competitive,” Grossman said.
Grossman adds, “I do think we could see this market stabilize and get back over the $9 level.” However, he believes the chance for $10 soybeans is slim.