Trade conflict puts damper on USDA export outlook

July 22, 2018 |

In Germany, UFOP reports that the U.S. Department of Agriculture expects the U.S. export potential to shrink because of the slowdown in demand from China in the wake of the trade dispute with the U.S. The USDA raised its forecast of 2018/19 US soybean production and now expects output to reach 117.3 million tonnes, up from the previous month’s estimate of 116.5 million tonnes. Although this figure is slightly lower than a year earlier, it is set to lead to a swell in ending stocks. According to Agrarmarkt Informations-Gesellschaft mbH (AMI), the explanation is that sales, especially to foreign countries, are in danger of dwindling in the wake of the trade conflict between the US and China. Both countries have imposed high punitive tariffs on each other’s imports. China charges import duties of 25 per cent on US soybeans and is consequently looking for alternative sources. This situation is already reflected in the current USDA export estimate, since the forecast has been lowered significantly to 55.5 million tonnes, from 62.3 million tonnes the previous month. This means that US exports will shrink to even less than the previous year’s volume. A large crop and smaller exports cause the already large US soybean stocks to increase further to record high levels. USDA expects stocks to climb to just less than 16 million tonnes. This translates to a 25 per cent rise from the previous year.

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Category: Policy

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