The Corn/China Syndrome: Will Expected Acreage Shift from Soybeans Benefit Ag Retailers?
In terms of crop years, 2018 was something of an oddball. For the first time since the 1980s, soybean acreage outpaced corn to become the “king crop” among U.S. growers during the year.
Going into 2019, however, this trend has reversed itself. According to the latest crop planting estimates from USDA, U.S. growers plan to plant 92.8 million acres of corn this year, an increase of 4% from the prior year. For soybeans, the acreage numbers are expected to be down 5% to 84.6 million acres. And in both cases, U.S. growers are likely looking at China and its buying habits as motivators.
For several years now, as its population has continued to grow and livestock production has increased, China has been a major buyer of U.S. grown soybeans. This demand has kept the commodity prices for the crop relatively high compared with other crops such as corn.
But during the middle of 2018, the U.S. and China began a protracted trade dispute. This almost immediately impacted soybean exports to the country as Chinese buyers halted or cancelled their orders to avoid paying increased tariffs. At present, this dispute between the two countries is being debated, but no resolution has been agreed to yet.
In the meantime, ironically, Chinese importers have booked their largest U.S. corn purchase since the fall of 2013. According to USDA, the country’s private exporters have sold 300,000 tons of corn, to be shipped between now and July. Until this announcement, China had only committed to buying 166,328 tons of U.S. corn.
So, with a bit more clarity in the mix for corn vs. soybeans, U.S. growers have apparently decided that corn will once again be “king” among row crops for the 2019 growing season!