Grain commodities have faced significant headwinds in recent months. It seems that bearish news keeps following bearish news. In addition to above-trend crop yields in the U.S. adding to already abundant inventories, the strong U.S. Dollar has made it difficult for the U.S. to compete for global export markets. In this week’s post, we’ll take a look at corn and soybean exports to evaluate current conditions
Planting intentions for 2016 will draw considerable attention in the coming months. Crop insurance guarantees are one factor which will play into this decision. As we pointed out last year, crop insurance guarantees have fallen considerably in the past two years and barring a rally, guarantee prices are likely to be lower again this year.
At current levels, crop insurance will not guarantee revenue sufficient to cover variable costs plus land rents. The relative levels of corn and soybean prices are similar to last year and do not appear to suggest a large shift in acres from last year. Continue reading →
Recent disappointing economic activity from China has markets and observers around the World nervous. Everyone is wondering how severe the conditions are and what the potential impacts may be. Agriculture has not been insulated as market commentators have recently cited these concerns in response to nervous commodity markets.
This is a significant change in tone from just a few years ago when rapid economic growth in China, fueled by its population of 1.4 billion and rising incomes, helped power the recent boom in agriculture. Concerns are mounting that a slowdown in China’s economy may exacerbate the current downturn in U.S. agriculture.
To better understand how China interacts with the global agricultural market, we took a look at 11 commodities and how China’s production, consumption, and imports of these commodities scale at a global level. Data for this were collected from the USDA’s Foreign Agricultural Service (FAS). Continue reading →