Several months have passed since the United States entered a trade war with China. We have discussed some of the impacts, but what happens if a deal is not reached? We will discuss the possibilities for the soybean market up next.
AUDIO: Jim McCormick, Allendale Inc.
The U.S. Department of Agriculture tomorrow will release its November World Agricultural Supply and Demand Estimates (WASDE). Jim McCormick, senior adviser with Allendale, says export demand for soybeans, ahead of the report, looks grim.
“The bean demand has been, to put it bluntly, bad,” McCormick said. “Without China in the market, our export sales have faltered dramatically. The government’s only roughly cut demand 70 million year-on-year. The sales are so far behind pace, they’re probably going to have to be honest with themselves and lower this export target on Thursday.”
McCormick remains bearish on soybeans. However, he looks forward to an opportunity for the U.S. to make amends with China.
President Donald Trump last week confirmed plans to meet with President Xi Jinping at the G20 Summit later this month. McCormick says the results from this meeting could make or break the soybean market.
“As we ramp up to this meeting, you’re going to hear more about preliminary stuff getting done. One of the economic leaders, of China, yesterday was quoted as saying they were looking forward to trying to get this thing worked out with the United States. This is going to be crucial,” McCormick said. “Exports are running way behind normal for this time of year. If we cannot get this deal done, I’m fearful of the price of beans.”
McCormick says it is crucial to reach an agreement at the G20 Summit due to competition elsewhere.
“Right now, our biggest competition is Brazil. Brazil has been selling every bean they have from last year’s crop, but the fact is, they’re putting this year’s crop in at a record pace,” McCormick said. “They’re talking over 60% planted. Normally they’re at 40%. There’s now talk that Mato Grosso, one of their bigger states, planted beans so early they could be harvesting their first field in mid- to latter part of December, which is not good for the U.S. producer.”