Headlines:
Both China and U.S. Will Feel the Pain of a Soybean Trade War
U.S. soybean exports will be down a quarter-billion bushels in the coming year due to steep Chinese tariffs on the oilseed, estimated the USDA on Thursday. In a boomerang effect of the U.S.-China trade war, Brazil would indisputably replace the United States as the world’s largest soybean grower as China scouts, without full success, for alternative soy suppliers. “The tariff that China recently imposed on U.S. soybeans is expected to cause higher prices for soybeans in China,” said USDA analysts in the monthly WASDE report. Chinese soybean imports were forecast to fall by 8% during the 2018/19 marketing year despite larger shipments from Brazil, already the world’s largest soybean exporter. “It is likely that [livestock] feed rations will be altered,” said the companion Oilseeds: World Markets and Trade report. Chinese consumers will see a smaller supply of soy oil, their preferred vegetable oil for cooking and processed foods. When the planting season begins in Brazil in September, growers are expected to expand soybean seedings by 2.4 million hectares, leading to a record crop of 120.5 million tonnes in 2018/19, some 2.5% larger than the projected U.S. harvest. Brazil, one of the world’s agricultural giants, nearly tied the U.S. as the top soybean grower last year, after years of slowly closing the gap. Two UN agencies forecast neck-and-neck competition in soybean production between the two countries throughout the coming decade.
EU, Russian wheat harvest hopes suffer further downgrades
World wheat production prospects took another dent with downgrades for Russian and European Union crops, although Rabobank retained a, relatively, upbeat forecast for Australian output. Russia’s agriculture ministry pegged the country’s wheat harvest at 64.4m tonnes, in the latest of a series of downgrades to the crop this week, including a cut of 1.5m tonnes to 68.5m tonnes on Thursday in the US Department of Agriculture’s forecast for production, excluding Crimea. “Total [grain] crop loss may reach around 30m tonnes,” Russian farm ministry spokesman told the Tass news agency, adding that the “gross grain harvest is projected at around 100m tonnes, including 64.4m tonnes of wheat”. Earlier this week analysis group SovEcon cut its Russian wheat harvest forecast by 2.9m tonnes to 69.6m tonnes, while rival Ikar lowered its forecast by 700,000 tonnes to 70.8m tonnes. The worsened forecasts reflect a dearth of rain in many winter wheat growing areas, with the USDA on Thursday attributing its downgrade to “persistent drought in the Southern, North Caucasus, and Volga Districts”, which has sent hopes for the all-wheat yield down 15% from last year’s record high.
Summary:
Soybeans Fall on record US carryover forecast as Wheat Jumps on shrinking global supply. The Corn market was weaker as the sellers regained control of the market on thoughts of a good crop in the field. The Commitment of Traders report showed legacy large specs at short 73,300 contracts. A lack of a wide spread hot and dry forecast continues to weigh on the Corn market. The Soybean market was lower again as it closed out the week trade concerns over another round of tariffs are set to be put in place next Friday. The Commitment of Traders report showed legacy large specs at short 72,400 contracts. The Wheat market traded higher as additional mention of a smaller global carryout surfaced in the headlines. The Commitment of Traders report showed legacy large specs at short 24,700 contracts.
