The United States Department of Agriculture’s (USDA) March World Agricultural Supply and Demand Estimates (WASDE) report showed hope for more corn consumption and indicated Argentina’s soybean crop would not come back from dry weather. However, uncertainty regarding soybean exports rose when President Donald Trump stated tariffs on imported steel and aluminum would go into effect in a little over two weeks, with little chance of a congressional override.
The USDA left its production estimates for this year’s corn and soybean crops unchanged from its February forecasts, while raising its projection for U.S. corn-ethanol output and slashing its outlook for Argentina’s soybean harvest.
Estimated ethanol use was raised 50 million bushels to 5.575 billion, or 38% of the total crop. The Department also increased its estimate for corn exports by 175 million bushels to 2.225 billion, citing “U.S. price competitiveness, record-high outstanding sales and reduced exports from Argentina.”
USDA cut its forecast for Argentina’s soybean production by 13% to 47 million metric tons. Projected soybean exports were up for Brazil and down for the United States, possibly due to a shift in Chinese buying.
The WASDE report blamed the cut to Argentine soy output on “lower projected yields resulting from dry conditions through much of the growing region in January and February.” Brazil’s soybean production was raised 1 million tons to 113 million.
Most of the figures for the U.S. wheat crop were left unchanged from February except for exports which were cut 25 million bushels to 925 million. Ending stocks were raised 25 million, to 1.034 billion bushels.
President Trump imposed his metals tariff at 25% on imported steel and 10% on aluminum. The tax does not apply to Canada and Mexico, but does apply to China, Japan and European products he says are “dumped” in the country.
Washington sources say there is little chance of Congress blocking the action since it would require a veto-proof majority. Many members of Congress, from “rustbelt” states, would vote to impose the tariffs.
The targets of the tariff are China and Japan. Mexico and Canada would have a temporary exemption. All are major buyers of U.S. soybeans, corn and other commodities that can be sources by European and South American countries.
Retaliatory action by major agricultural buyers in Asia is unknown, but the shift by China to Brazilian and Argentine soybeans is already underway. Mexico and Canada may only have a temporary exemption, so their future sourcing of raw agricultural products could go south as well.