Economists expect US soy export growth
(Posted on 28/08/20)
One might question how COVID-19 and U.S. Soy exports are related. For many, this might be a far stretch, but not for Tanner Ehmke, an economist with CoBank Knowledge Exchange.
While coronavirus continues to grow around the world, especially in the United States, some areas of the world appear to have gotten it contained.
While those economic forecasts look much brighter, unfortunately, we cannot say that for the United States, Ehmke said during his presentation that was part of the opening session of the U.S. Soy Global Trade Exchange and Specialty Grains Conference.
“This has a huge impact on the outlook for the economic recovery for the United States,” Ehmke said. “This means many areas will remain closed, or are reclosing … severely clouds the outlook.”
Going forward, Ehmke said this means we can expect a struggling U.S. economy until a vaccine is developed and deployed across the masses.
As such, the U.S. Federal Reserve has injected an unprecedented amount of liquidity into the world economy, he explained, noting that the Fed has led the world in its quantitative easing.
“All of this added together (gloomy economic outlook, increase in liquidity, political gridlock, 2020 election) — all this uncertainty has created a depressing outlook for the U.S. dollar,” he said. “Some economists even have a 30% drop in the value of the U.S. dollar.
“Therefore, it stands to reason if we have a weakening of the U.S. dollar, it means we could have a more bullish outlook on soybean exports and soybean prices.”
Outside of the United States, Ehmke pointed to the Baltic Dry Index (BDI), which has been recovering and is a positive signal of global economic expansion. Ehmke believes the world economy outside of the U.S. has seen the worst of COVID.
He said the Brazilian Real has been strengthening; whereas, in Argentina, the Peso has been weakening along with Paraguay’s Guarani.
“The fact that the Brazilian Real is strengthening while the U.S. dollar is weakening, this is an advantage to U.S. exports and a headwind to Brazilian exports going forward,” Ehmke said.
According to the U.S. Department of Agriculture’s most recent report, it expects record high soybean production around the world and unprecedented availability.
Ehmke said global soybean trade is also seen as moving to a new record, much of which is due to the United States.
USDA expects U.S. Soy exports to rebound 29% year over year, while Brazilian exports are expected to be down 10% year over year.
China has increased imports from the United States just over last year, but still well down, Ehmke added, noting that a lot of soybean sales remain on the books for China as we close out the marketing year.
“We anticipate that China will continue to buy more soybeans from the United States as we move into the new crop and shipping season,” he said.
During the presentation, Ehmke presented with Will Sawyer, who spoke on the animal protein outlook and its impact on soybean demand. Stay tuned for Part II.
The U.S. Soy Global Trade Exchange and Specialty Grains Conference is hosted by the U.S. Soybean Export Council in partnership with the Specialty Soya and Grains Alliance.
BHP has executed a 15-year contract extension to its power purchase agreement (PPA) with energy provider... Read more
Rio Tinto has released its third quarter production results.Chief Executive J-S Jacques said “... Read more
Michelle Manook, Chief Executive, World Coal Association (WCA) has issued a statement on the World Energy... Read more
Superior Industries, Inc., a global manufacturer and supplier of bulk material processing and handling... Read more
As part of its environmental modernization program, by 2024 RUSAL, a leading global aluminium producer... Read more
As the North American economy continues its recovery, CN is pleased to announce that its people moved... Read more
FLSmidth has confirmed the signing of a definitive agreement for the acquisition of KnowledgeScape,... Read more
BHP CEO Mike Henry has announced BHP’s commitment to training and funding for 3,500 new Australian... Read more
The National Grain and Feed Association (NGFA) in the USA and 61 other U.S. agriculture stakeholders... Read more
RUSAL, a leading global aluminium producer, has announced that it has been registered as a new resident... Read more