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Argentina and China Officials to Discuss Trade

Increasing agricultural export business to China among discussion items

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Argentina and Chinese Officials Meet: Agriculture Among Topics

Increasing agricultural export business to China is among the items that officials from the two nations will be discussing as the two countries meet in China this week.

In particular, Argentina is trying to increase the volume of soybean meal exports.

China is the largest buyer of Argentine soybeans but does not import any of its higher-margin processed meal.

At 70 MMT per year, Chinese consumption of soymeal is the largest in the world. The country imports only small amounts of soymeal and none of it is from Argentina.

Government officials from China and Brazil met earlier this month in Brazil and are scheduled to meet in China during May. Expanding agricultural export access for Brazilian firms is a key item being discussed.

What It Means for the U.S. Farmer: Neutral. It has been well advertised that China has been working to diversify its global agricultural commodity supply chain. China has a long history of investing in Argentina. Given the relationship between the two countries it comes as no surprise that Argentina would like greater market access for soybean meal exports. Increasing market share of soybean meal is a longer term objective for the Argentine government which ultimately can take market share from U.S. soybeans.

StatsCan: 2019 Spring Wheat Acres Increasing; Canola Declining

Statistics Canada, Canadian government’s national statistics agency, released their prospective planted acres for 2019.

  • Spring wheat acres expected rise by 2 MA YoY to 19.3 MA.
  • Durum wheat acres expected to decline by 1.1 MA YoY to 5.0 MA
  • Canola acres are expected to decline by 1.5 MA YoY to 21.3 MA
  • Soybean acres are expected to decline by .7 MA YoY to 5.6 MA
  • Field pea acres to rise by .4 MA YoY to 4 MA

What It Means for the U.S. Farmer: We believe that the expanding spring wheat acres is bearish for the U.S. producer and can be bearish for the Minneapolis futures board.

Expanding Canadian supplies combined with the largest HRS carry-out since 1986 does not present an optimistic scenario. We believe that the reduced canola acres can be a positive for the U.S. canola producer and canola futures.

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

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