The News & What it Means – More Soybean Acres Ahead & China Set to Buy More US Beef

By John DePutter & Dave Milne – May 16, 2017

 

The news:

A market analyst expects additional soybean acres to come from winter wheat fields damaged by snow earlier this month.

– Brownfield, May 11

 

What it means:

Already large acreage estimates could get even larger.

 

At the end of March, the USDA projected 2017 US soybean planted area at a record high 89.5 million acres, up 7% from a year earlier. So even without any potential additional soybean acres caused by the losses in winter wheat, soy planted area and production figured to rise sharply this year.

 

The fact Midwest corn planting hasn’t gone all that well due to overly wet conditions could further augment the soybean total, as soybeans can be planted later than corn without the usual yield risk.

 

On the winter wheat side, no one is sure yet just how the early May storm that dumped up to two feet of heavy, wet snow on portions of Kansas, Colorado and Nebraska will ultimately impact final harvested area. It is notable that Kansas Wheat CEO Justin Gilpin estimated that up to 3 million acres of winter wheat in Kansas alone were affected by the late-season blizzard. Of course, not all of those acres will be written off but it’s a safe bet at least some crops will be lost.

 

Bottom line:

It’s a good bet that some of those lost wheat acres get seeded to soybeans.

 

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The news:

China will finally open its borders to US beef while cooked Chinese poultry is closer to hitting the American market as part of a US-China trade agreement.

– Fox Business, May 11, 2017

 

What it means:

For the trend-setting American beef market this a big deal.

 

The details of the deal will of course hold great sway over the amount of US beef that eventually gets shipped to China.

 

But the fact American cattle and beef organizations have been clamouring for years for access to the mainland Chinese market tells you all you need to know. US beef has been largely shut out of China since 2003, in response to a case of BSE.

 

At the time, the closing of the Chinese market meant little, because the country was not a big beef importer anyway. But that’s all changed since, with tastes and food choices in a country of 1.4 billion people rapidly diversifying.

 

In fact, per capita beef consumption in China soared 33% from 2012 to 2016, according to Bloomberg Intelligence. Now the world’s second largest beef importer, China’s imports grew roughly 10 times between 2010 and 2015, as per US Meat Export Federation statistics.

 

China is already the largest buyer of US soybeans and a major purchaser of American pork. Just imagine if it went all in on beef.

 

 

The DePutter Market Advisory Service (for Western Canada readers) covers soybeans and cattle. Ag-Alert (for Ontario readers) covers soybeans and cattle. Click below for free trials.

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