Weekly export sales take a plunge, as strong tensions with China remain.
AUDIO: Jim McCormick, Allendale
The U.S Department of Agriculture (USDA) released its latest, weekly Export Sales report. Jim McCormick, senior adviser with Allendale, says the results were “even more disappointing” than last week’s sales.
“Bean sales came in at 7.8 million bushels. We need to sell about 29.5 million bushels a week to hit the USDA’s target. Corn sales came in at 13.8 million bushels. We need to average roughly 36 million bushels a week to hit the USDA’s target,” McCormick said.
McCormick says the Department of Agriculture will have to adjust its carryout numbers, if sales continue to fall short of expectations. McCormick remains optimistic on corn. However, he says “the big problem is the bean market.”
“Traditionally, we’ve sold about 57% of what the government anticipates us to sell. We’re only at 38% right now,” McCormick said. “At the current pace, the government is overstating estimates. They’ve only lowered exports by 75 million bushels year-on-year. At the current rate, they may miss that by 100 to 200 million bushels, which would be incredibly bearish. That will push the carryout over one billion bushels, so that is something we need to see turnaround very quick(ly).”
So, what is holding soybean exports back?
McCormick says the answer is “plain and simple” – China.
“We need to get this trade conflict worked out,” McCormick said. “Unfortunately, it looks like it is getting worse instead of getting better. In the last 24 hours, President Trump has come out and said, ‘They’re not making any hard recommendations or changes in policy, so until they do that, we’re not going to meet.’ Essentially, both countries are digging in their heels.”
McCormick says an unresolved trade dispute further harms American agriculture by providing opportunities to top, competing markets.
“Each week we miss a sale, we’re one week closer to a harvest of a Brazilian crop. Their crop is going in at a record pace, they’re planting record acreage and it looks like we’re going to have an El Nino, which traditionally brings them record crops,” McCormick said. “The last thing we need in Middle America is beans we’re not selling to China and then all of a sudden have to compete with a fresh, South American crop.”