SOYBEAN TRADE OPTIMISM DOESN’T OVERCOME HUGE SUPPLIES


Ideas that the upcoming meetings between the US and China will only establish an agreement to a framework for further talks came as a disappointment to the soybean market bulls who were hoping for a lot more.


While progress is progress, the US is still pushing ahead on its plans to raise tariffs on Chinese imports in January. Soybean futures fell off of their highs this week and meal prices in China surged 3.5% on Friday, as there seemed to be little hope of a quick resolution to the dispute.


The trade realizes that a long road of negotiations lies ahead and that the window for US exports is rapidly closing. A trade deal with China will not reduce global or US ending stocks from the record highs this year (995 million bushels and 112 million tonnes, respectively). The stocks/usage ratios for the US and the world are also pegged at record highs.


Chart 1: Soybean Ending Stocks / Usage - World vs US


Source: USDA


30 | ADMISI - The Ghost In The Machine | November/December 2018


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