China May Buy US Ag Products for State Reserves
- A China Commerce Ministry official said US/China should increase cooperation to help revive the global economy in the midst of coronavirus.
- Considerations include potentially buying 10 million tonnes of US soybeans for Chinese state reserves if demand from private buyers isn’t enough.
- China could use US origin corn to fulfill its annual import quota of 7.2 million tonnes, and potentially reach a total of 20 million tonnes.
- The potential purchase of 1 million tonnes of US cotton was also mentioned.
- Wheat and meat imports were not specifically mentioned in the report, but Chinese buying of those products has been ongoing.
FBN’s Take On What It Means: China needs to accelerate purchases of US farm goods to meet its Phase 1 trade deal commitments after the coronavirus delayed some imports, and is reportedly concerned about potential supply disruptions. After the deal was signed in December, China was expected to make $50 billion in agriculture purchases over the next two years. Just reports of China buying have helped prices recover from recent depressed levels. The question becomes whether their purchases can overcome the bearish influence of ethanol, biofuel, and other coronavirus demand destruction.
USDA Ag Attaché Reports Argentina Soy Crop Outlook
- The attaché estimated this year’s (Apr 20-Mar 21) bean crop at 51.5 million tonnes vs USDA’s April projection of 52 million and 55.3 million last year.
- Exports are forecast at just 6.5 million tonnes vs USDA’s official estimate of 8.0 million - but both are down from 10.3 million last year.
- Meal exports are forecast at 28.4 million tonnes this year vs USDA’s 29 million and last year’s 29.6 million.
- For next year (Apr 21-Mar 22), the soy crop is seen at 51 million tonnes, exports at 9 million, with meal exports at 29.4 million.
FBN’s Take On What It Means: Lower production than originally expected in Argentina this year doesn’t do much to help the global supply/demand balance. A solid rebound in next year’s production would continue the outlook for abundant supplies and moderate prices.
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