Soybean bears seem to be making a little more noise about a burdensome balance sheet. The production problems in Argentina have been well advertised, but the trade seems uncertain about the full extent of damage. The Rosario Grain Exchange made a huge cut yesterday to their Argentina soybean production estimate from 46.5 down to 40 MMTs. But earlier in the week I was hearing talk from good sources inside Argentina that yield loss wasn’t going to be as severe as many have been forecasting. Meaning perhaps the crop is more like 44 to 46 MMTs.
Which is still lower than the USDA’s current estimate of 47 MMTs and significantly lower than last year, but not as low as some are forecasting. I’m also hearing there’s a small strike taking place at two or three Argentine crushing facilities. On the flip side, bears argue that the Brazilian crop is getting bigger and will be record large. They are also arguing that U.S. producers are going to plant a record number of soybean acres in 2018 and that Chinese buyers could continue to shift some additional U.S. marketshare towards Brazil. For what it’s worth, sales to China are still running more than -6.0 million metric tons behind sales commitments this time last year, even though the forecast is for China to increase their global imports by around +5%. I should also point out, despite the weekly U.S. export sales number being strong, we are still running about -7% behind last years pace and still need to pick up more momentum to meet the USDA’s current U.S. export estimate. Good news is NOPA’s monthly crush data for February showed there was 153.719 million bushels of beans crushed, which was well above most all trade estimates, well above last years 142.79 million bushels crushed and record large for the month of February. As both a producer and a spec, I’m just worried that once the Argentine crop is “zeroed in” the trade will quickly shift attention to a new record in Brazil and new record acreage planted here in the U.S. Meaning the trade might have gotten a little ahead of itself… especially if rumors or talk of a trade war or tariff retaliation becomes more of a reality.