Morning Comments; Thursday, January 24th, 2019
MaxYield Cooperative - SETZ - Thu Jan 24, 5:33AM CST

Corn and soybean values are lower this morning.

It is being estimated that with the earlier harvest this year in Brazil, farmers have harvested 2.2 MMT more soybeans this year than last. As expected, these early soybeans are finding their way to the export terminals and destined for China. It has been rumored that Chinese buyers have purchased 25-30 cargoes of Brazilian soybeans.

Now that Brazilian supplies are becoming available, Chinese buyers can book their supplies at a large discount to those of US origin. After all costs, including tariffs, it’s estimated that US soybeans into China cost roughly $14.50 per bushel. The Brazilian supplies are estimated to cost around $11.50. This price gap has widened in favor of Brazil since positive discussions between US and China last month put pressure on basis values in that country.

It is estimated that when the 25% tariffs are lifted, the value of US soybeans will become $2.75 cheaper to Chinese buyers. While that is obviously beneficial to the US, export economics will still favor Brazil. US values look to be more competitively priced with Brazilian soybeans in the late summer delivery months.

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