US crops find buyers despite fewer deals.
New crop contracts have dropped nearly a dollar before the 2023 growing seasons. Trade has never been a certain thing. More questions are being raised about U.S. crop demand.
Trade agreements with other countries are a great way to reduce market fears about a decrease in demand. However, there haven’t been any reports of new deals being signed in the past months. Roach Ag Marketing’s economist Sam Giannola said that a lot of the future will be determined by South American yields.
Giannola stated that South America currently has 10% of its second crop corn in, and that they have just received a lot of rain at the beginning of February. It looks like they will be OK but they are still a long way from harvesting it. “The American market is where most of our corn is sold, so we will likely see strong prices until the planting intentions report at March’s end.”
Recently, concerns have arisen about Mexico, which is the largest buyer of U.S. corn. They are considering banning GMO corn. Although U.S. Secretary for Agriculture Tom Vilsack stated that there was no plan to reach a compromise with Mexico, this shows how fast these agreements can cause more chaos than certainty.
Talking about trade with China is not enough. China is the largest purchaser of U.S. beans. There has been no sign of any deal since the Phase 1 agreement ended in 2021. Multiple factors are at play. These include South American competition and issues dating back to pre-COVID.
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Jack Scoville, Price Futures Group, stated that “I don’t believe we’ll see any additional trade deals coming out. So it’s just going to need to be raw market demand.” “COVID is now the norm, and we used to have African swine flu before that.” China saw a significant change in the way they feed hogs, and it was more difficult to consolidate. “I don’t believe we have been able to really get a clear picture of their needs.”
Export uncertainty had led to new crop contracts dropping nearly a dollar ahead of the 2023 growing season, and while trade has never been a sure thing, more questions continue https://t.co/lsZXRk9ill
— MissouriFarmerToday (@missourifarmer) February 11, 2023
Scoville stated that soybean exports have increased in recent weeks, and that they may increase for corn. Brazil’s slower harvest pace has also affected Scoville. Brazil’s 2022 crop will see corn sales rise in the coming months. The cheaper corn prices offered by Argentina and Brazil are reducing any sales of U.S. corn to China.
He said, “There is a window for opportunity here, February through June as Brazil is actually offering stuff to China and is pricing it at about 50 cents per bushel less than U.S corn.”
Giannola stated that a lower supply of U.S. corn stocks is one factor that may have limited demand concerns. According to USDA reports, the carryout has been declining in recent years. This means that there is less corn available and prices won’t drop if supply is limited.
He said, “If we have any kind of weather scare in 2023, when we already have fewer bushels than we thought), we might see a larger move than you would otherwise expect from that type of news.”
Inflation is another factor that has affected many countries. Chad Hart, an Iowa State University Extension Agriculture economist, stated that high prices are good news for farmers but could scare away countries who want to reduce their budgets.
He said, “In the short-term, we still need to be in good health with another year (soy)beans” in the teens. “The question is, “How long can we keep this going before we move on?”
He said, “In the short-term, we still need to be in good health with another year (soy)beans” in the teens. “The question is, “How long can we keep this going before we move on?”
