U.S. Soybean Exports Could Surge On Chinese Agreement

URBANA, IL – The proposed Phase One trade deal with China continues to move toward a resolution. Dr. Todd Hubbs with the University of Illinois explains that the initial announcement of $40-50 billion a year of agricultural exports gradually morphed into a $20 billion arrangement. Stronger soybean prices appear to have priced in much of the recent export activity and leave the question of what if any change in soybean exports may come from the new deal. Hubbs says the projection for U.S. soybean exports during the marketing year is just under 1.8 billion bushels, a seven million bushel increase over the last marketing year. Soybean exports through October 24th (2019) total 292 million bushels, a 21 million bushel year to year increase. Another 416 million bushels have been sold for export but not shipped. Outstanding sales are about 100 million bushels below last year despite increased Chinese buying as current unshipped soybeans to China total 167 million bushels. In the past five marketing years – before the onset of the trade war – U.S. exports to China averaged 37.7 percent of China’s total imports. If a trade deal led to a return to historical averages, soybean exports to China this marketing year would total 1.18 billion bushels. Hubbs explains that by factoring in export substitutions related to expanded South American shipments to non-Chinese nations, expansion of U.S. exports by 70 to 100 million bushels above the present projection seems realistic. This scenario, he says, remains strongly dependent on production levels in the U.S. and South America and the final framework for the trade deal. The magnitude of this expansion may not be at the levels many hoped for when accounting for changing trade flows associated with South American export potential, but a substantial production shortfall from any of the major producing nations holds the potential for major opportunities for other growers during the upcoming year.
Read more here: https://farmdocdaily.illinois.edu/2019/11/what-does-a-trade-deal-promise-for-soybean-exports.html