US official paints gloomy picture for soyabean farmers
The chief US agricultural economist laid out a gloomy picture for the country’s soyabean farmers, saying record-high stocks should weigh on prices even if the Trump administration resolves its trade dispute with China.
Robert Johansson, chief economist at the US Department of Agriculture, presented a bearish forecast for US shipments of soyabeans at the agency’s marquee outlook forum, ft.com wrote.
Total shipments of the Us-grown oilseeds fell sharply after China hit them with a 25 percent tariff last July. The trade dispute cost soyabean farmers $7.9 billion, Johansson said.
Johansson, however, said he foresaw ‘little export recovery’ in soyabeans for the remainder of this crop marketing year and painted a dim vision of the future. He forecast that unsold soyabean stocks will more than double to 24.8 million tons.
“The record-high stocks in the US due to the trade situation will take several years to unwind, which will weigh on US prices going forward even with potential China purchase agreements,” Johansson said, according to his prepared remarks.
“Compared to our 10-year projection of soyabean prices from last year, our current estimates show that prices for soyabeans are likely to take at least until the 2020 crop year to recover.”
He estimated an average soyabeans price of $8.80 a bushel for 2019. That would be up 2.3 percent from last year but lower than current prices. Soyabean futures for March were $9.08 on Thursday, according to Chicago Board of Trade data.
China resumed modest purchases of US soyabeans after US Presidents Donald Trump and Xi Jinping agreed a 90day trade truce late last year. Its negotiators have made tentative offers to buy more US farm products.
Sonny Perdue, the US agriculture secretary, said that it would be ‘premature’ to predict how many agricultural products China would buy under a trade deal. He said China needed to address the theft of intellectual property, a serious concern for western companies in the country, and address restrictions on biotech crops.
He was more optimistic than Johansson on soyabean exports.
“If we can reach an agreement on enforceability of structural reforms dealing with intellectual property, I think we could recover those markets in China very, very quickly,” he said.
The soyabean tariffs have also unsettled agricultural traders. Bunge, the world’s largest oilseed processor, reported it had lost $125 million in soyabeans during its fourth quarter on “factors related to China trade and demand”.
“It’s confusing,” Gregory Heckman, Bunge’s interim chief executive, said of China’s soyabean purchase outlook. “The market is trying to assess it, and we’re again trying to stay very nimble.”