IABRN — Chinese trade officials last week announced future Ag purchases will be “market-based.” Thus, American producers will need to compete with other nations for guaranteed market increases.
South America will fulfill China’s immediate agricultural purchase orders. Greg McBride, commodities broker with Allendale, Inc., shares why.
“South America right now is the biggest and best game in town because they are (at) a discount, especially when it comes to soybeans. It’s about a 30-dollar per metric ton discount. The market takes that, builds a little premium and then says, ‘We gave you a little bit of rope, now we’re going to pull it back,” McBride said.
China purchased 800,000 tons of soybeans from South America last week. McBride encourages producers to remain patient,” as China will increase purchases of United States agricultural products.
“We’re saying, ‘We know we have a premium in the United States for soybeans, corn and wheat. We’re going to have to bide our time. This deal will be a big deal. It will be a big shock to the markets when we start to see demand come through.”
McBride expects China to ramp up new crop purchase in July, August, and September, as they plan for the fall. He adds the United States Department of Agriculture’s World Agricultural Supply and Demand Estimates (WASDE) report will give producers a better idea of demand moving forward.
This article originally appeared on the Iowa Agribusiness Radio Network
