More crop demand needed

February 12, 2019

 

GRAYMONT – There is plenty of risk in the marketplace and markets are going to be very curious moving forward.

 

“The big crop did not get bigger,” Ben Peters of Advance Trading told farmers at the Graymont Co-op insurance meeting last week.

 

Peters noted our carryout from a year ago is shrinking and our buffer is getting smaller. As we build stocks, we just need demand. Peters pointed to a threat on ethanol as more electric vehicles are projected to come onto the market in the coming years.

 

“The more success this industry has, the less miles we’ll drive,” Peters said.

 

U.S. corn exports are solid so far this year and the world is actually coming to the U.S. for wheat now.

 

“That’s kind of what we are becoming on beans and corn too.”

 

Our competition learned how to raise corn in recent years – especially Brazil, where growers started to plant corn following beans. Around 75 percent of Brazil’s corn is double-cropped after beans.

 

“We are becoming a residual supplier,” Peters noted. “The last time we were in this environment was the late ‘80s.”

 

Hard decisions are being made in the ag industry due to what is going on in the world. As China needs less of our beans due to the tariffs, our carryout grows. Peters expects the U.S. to start selling corn to China someday as they are selling grain out of reserves. Unfortunately, the trade war is still front and center.

 

“We are at crush capacity,” Peters said. “We are trying to find a home for beans.”

 

Argentina had a short bean crop last year. In fact, they were our number one export market for soybeans. African Swine Fever is not going away either. Hog markets have gone to negative values and China makes up half of the world demand.

 

If Brazil keeps increasing their acreage, Peters wonders if the world will even need our products in a year. The export side remains volatile as we have been building bean stocks for the past decade.

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