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USDA slashes soybean exports amid trade issues

Source: Wikimedia Commons

The U.S. Department of Agriculture (USDA) releases its World Agricultural Supply & Demand Estimates (WASDE) on a monthly basis. However, the July 2018 report was approached differently…this time, taking the trade war’s impact into consideration.

A market strategist reviews the reports findings below.

AUDIO: Brian Grossman, Zaner Ag Hedge

The U.S. Department of Agriculture, on Thursday, released its July World Agricultural Supply & Demand Estimates report. Zaner Ag Hedge market strategist Brian Grossman discusses the reports findings.

“There was a bit of a reduction on the new crop (corn) ending stock, coming down to 1.55 billion bushels. They lowered that by 25 million (bushels), while the average trade was looking for it to go up a bit. They did, however, leave yield unchanged. Global numbers came down, as well. New and old crop both lower, and Brazilian production lowered by 1.5 million metric tonnes. Soybeans, under a bit of pressure. USDA torn the BAND-AID® off and lowered new crop exports by 250 million bushels. They also lowered our beginning stock numbers, so we have a new crop ending stock estimate at 580 million bushels,” Grossman said.

Grossman believes the Department’s view of trade with China, Mexico, and other countries is at its “extreme.” Hence, the lower export numbers. However, he remains optimistic about exports increasing in future reports.

“Slashing (soybean) exports by 250 million, I think, is them pulling the BAND-AID® off. They are, hopefully, at what they view as an extreme right now,” Grossman said. “Seeing the high ending stock number is likely going to limit some rally potential, and low prices rarely demand damage. So, I am going to be encouraged that, ultimately, we will see a higher export number than what they’re currently thinking.”

Grossman says “nothing is scaring exporters away.” He adds the lower grain prices will bring other nations to the United States market.