IAG Blog Archives:

April 9, 2018 | |

In These Trying Trying Times You DO Have Options

Just as with regular climate, the financial climate is never easy to forecast. It’s tenuous and uncertain - at best. And just when you think the storms have settled, things can shift quickly.

For instance, after Donald Trump imposed tariffs of $50 billion on imported Chinese goods, the Chinese government retaliated by announcing plans to match those tariffs with import levies on a number of U.S. products. Among these products are U.S. soybeans.

With the uncertainty of global events that are beyond your control, it is becoming increasingly important to find alternatives to protect your income. Implementation of a strategy that incorporates options is a great way to hedge against these risks.

 

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April 4, 2018 | |

Soybeans - Tariff Response

Two types of market responses:

 

Emotional – Market has a large spec soy long. Response is negative – easy to say today.

 

Logical:

  1. First: China does not trade corn or wheat – direct impact is none. Only impact to grains is indirectly from soybean values.
  2. Think of this as an additional freight charge.
  3. Freight differentials are absorbed in basis not futures.

 

Old Crop US soy impact:

  1. US has shipped 25 MMT of 36 MMT we expected to sell to China.
  2. Balance (11 MMT) can be filled by Brazil and other SA suppliers. Not Argentina this year.
  3. Brazil has 20 MMT of exports to Non-Chinese destinations that can be shifted to China.
  4. US will move 11 MMT more soybeans to Non-Chinese destinations.

 

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February 8, 2018 | | corn usda outlook

Could USDA Outlook Forum Take 2 Million Acres Off US Corn?

The USDA Outlook Forum is February 22-23. The crop acreage math points to 1.4 million less corn acres in 2018 vs. 2017. The USDA Long Term Projections had US corn and soybean acres at 91 million each. Leaving wheat acres unchanged YOY, adding 600k acres to cotton, moving soy to 91 from 90.2 last year, leaves only 89 million acres for corn – down 2mm from the Long Term Projections. 89 million puts total area for the four crops at 239 million. 239 million would be the largest Forum number since 239.8 in 2013.  239 is equal to the final planted area last year.

Corn area will be challenged and the IAG Models indicate 91 million acres of soybeans will prove to be just adequate for growing demand. It is likely soybean acreage in the USDA March 30 Planting Intentions Report will be above 91 million.

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February 5, 2018 | | soybeans usa

The World Will Need More Soybeans From the U.S.

The US has become the crucial supplier of soybeans to the world. World soybean usage has grown from 277mmt in 2013 to 345mmt in 2017. IAG is projecting usage to grow to 359mmt for the 2018 crop year. That’s over 15mmt growth per year.  The US has supplied the largest portion of that growth since 2013. (see chart) Since 2013 the US production has grown 33% faster than Brazil.

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