U.S. Grain Producers Hit With A Double Whammy - Uncertain Trade Policies and Increasing Competitiven
The recent change in administration in the United States has commodity organizations on guard given the executive order for the U.S.’s removal from the Trans-Pacific Partnership and the threat of trade war with Mexico, and wondering if additional changes may leave handlers with a bigger-than-expected portion of last fall’s massive corn and soybean harvest.
This concern is compounded by larger than forecasted harvests coming out of South America, especially in Brazil and Argentina, making the global export market more competitive.
Traditionally, the surplus from the U.S. soybean and corn harvest has been exported overseas, with China purchasing the majority; however, with the larger supplies available to China out of South America, the surplus may remain with the U.S. Given that domestic utilization for these crops tends to be unchanged year to year, both producers and commodity groups are uneasy about managing the surplus.
To be sure, all eyes will be on the upcoming harvest in South America, watching to see if the early harvest estimates prove accurate.