The US Department of Agriculture expects soybean acreage in the United States to become the third largest ever. This is surprising given that the country is dealing with huge inventories and a trade war. Why are American farmers sowing a large area of soybeans again?
The soy area in the United States (US) is expected to be enormous again. According to the United States Department of Agriculture (USDA), as much as 34,4 million hectares will be sown. Although this is approximately 5% less than last year, this is still the third largest area ever sown.
While the price has been under pressure for some time, soy remains the best alternative for American farmers. When looking at current soy and corn prices, soy yields the highest balance on. In addition, farmers have invested considerably in the cultivation of soybeans, which makes it not easy to change crops.
Largest ending inventory ever
Because a large area will probably be sown again, it is expected that the soy price will remain under pressure. The pressure on prices is already considerable, because the Americans are dealing with the largest end stock ever. This is expected to amount to 24 million tons of soybeans. That is double last year and 3 times as much as the year before. The tweet below also shows this well.
The fact that these stocks are still so large is largely due to the trade war between the US and China. Exports from the US are therefore probably 12% lower than in previous years. Countries such as Argentina and Brazil benefit from this. Exports from Argentina increased by 200% and those from Brazil by 4%.
Alternative sales
However, it must be said that the US is creative in finding other channels for the export of soybeans. The export of soybeans from Canada to China increased by 230%. It is striking that this partly concerns soybeans from the US, which Canada has imported from the US.
Even if the trade war comes to a successful end, US exports will not return to 'normal' levels. This is partly due to the outbreaks of African swine fever in China. This ensures that the soy price remains under pressure. The price is also relatively low in the European Union (EU), mainly because the US is trying to sell more in the EU.
China is buying Russia empty
The trade war has also ensured that China is also tapping into alternative sources. This is evident, for example, from the fact that Russia is being virtually completely bought out. To date, China has bought about 90% of Russia's soybean crop, equivalent to a volume of about 1 million tons.