Ho ho ho: Reuters reports upcoming Chinese orders of American soybeans may raise their total December buy to over 5 million tons of previously Trump-tariffed U.S. soy:
Chinese importers bought only around 4 million tonnes of U.S. soybeans last December, according to U.S. Department of Agriculture data, but season-to-date sales coming into the month last year were 40 times greater at 20.6 million tonnes, compared to about 515,000 tonnes at the beginning of this month.
If China follows through on all the expected buying, total sales would still be less than a quarter of what they were in late December last year [Hallie Gu and Karl Plume, “China Poised to Buy More U.S. Soybeans: Sources,” Reuters, 2018.12.20].
Resumed Chinese demand won’t make up for the Trump Administration’s unforced error in driving soy producers’ prices down, says ag marketer Chip Nellinger:
“Yes [China buying] is good and we can rally a little more,” says Nellinger. “It’s not something that is going to take us two dollars higher or back to where we were before the tariffs were announced.”
Nellinger says getting back to $12 soybeans is probably only possible with a weather or drought issue this summer [Clinton Griffiths, “$12 Soybeans Unlikely Even with China Back in the Market,” AgWeb, 2018.12.19].
Aberdeen-based mega-co-op Agtegra says it plans to spend $52 million to get more beans out from under tarps and into sixteen new bins at nine locations. Agtegra says it planned for 49 million bushels of beans and got only 41 million but has 40 million bushels in storage now. Boy, $52 million seems like an awful lot to pay to insulate oneself from another Trumper tantrum.
While Agtegra is spending money, uncertainty and low soybean futures are drying up soy processors’ investment pool:
The uncertainty is a turnaround from last year when farmer-owned agricultural cooperatives were building new soybean crushing plants at the fastest rate in two decades after several years of large crops.
U.S. grain merchant Archer Daniels Midland Co set a new record for crush volumes in the third quarter and benefited from strong margins.
But after months of soybean futures prices hovering around 10-year lows due to the lack of Chinese buying, farmers have little room for new ventures.
“There isn’t a lot of extra money out there to invest in something like that,” said John Heisdorffer, an Iowa farmer and chairman of the American Soybean Association [“China Trade War Rattles Investors in New US Soy Processing Plants,” Reuters via VOA, 2018.12.20].
The soy crushers are also having trouble lining up buyers for their livestock feed:
St. Lawrence Soyway’s plant is projected to process soybeans into feed for dairy cows. The livestock industry has also been hit by Chinese tariffs on dairy products and pork, though.
“As those farmers are not doing as well, their ability to buy meal at higher prices is not there,” [CEO Doug] Fisher said [Reuters via VOA, 2018.12.20].
Soybean futures in Chicago closed below $9 on Friday.