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Market eyes competition from Brazilian beans

Market eyes competition from Brazilian beans

Grain market money fade

The calendar has turned to November, and as far as the trade is concerned, it is time to switch attention from yields and supply to demand.

“Brazil is making sales for early December,” says Karl Setzer, a market analyst with Agrivisor. “Theoretically, they’re going to be exporting soybeans in four weeks.”

Those Brazilian soybeans are competition for U.S. beans. It used to be that the United States was the market of choice for many buyers because it was larger and more dependable than the South American competitors. But the South American harvest keeps getting bigger and earlier.

And the advantage the United States once had in infrastructure has largely been eliminated as Brazil builds new port and shipping facilities. Soybeans leaving Brazil can get to China two days earlier than those leaving the Gulf of Mexico from the United States.

The U.S. ships many beans through the Pacific Northwest, but there are capacity limits in that shipping area.

Add in a trade war that could have convinced some Chinese buyers that — if all other things are equal — they might prefer to deal with someone other than the United States, and you have a trend, Setzer says.

The infrastructure bill which was just passed by Congress and the second bill which also has money for infrastructure could help, but it takes years to build agricultural infrastructure, and those pieces of legislation won’t be enough to offset the infrastructure gains Brazil has already made.

But not all the news is bad. Exports of U.S. grain are still strong, and domestic feed demand is also strong.

This fall the basis is strong, meaning the market is sending farmers a message that it wants them to sell cash grain. It is even telling them that making sales for next fall for the 2022 crop is not a bad possibility

And for farmers, the idea of selling cash grain out of the field instead of paying for storage is an inviting possibility right now.

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Gene Lucht is public affairs editor for Iowa Farmer Today, Missouri Farmer Today and Illinois Farmer Today.

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