As trade talks continue between the U.S. and China, hopes for a deal between the two countries have continued to drive the markets.
President Donald Trump said he would consider an extension of the talks going into March or April, in an effort to complete a deal.
As soybeans continue to see their value fluctuate based on trade headlines, corn has remained relatively firm in recent weeks and could see an increase soon, according to John Payne of Daniels’ Trading.
He said Brazil “zigged” to meet the market by providing additional soybeans to China, and while the U.S. may not get those sales back, it creates a bullish outlook for U.S. corn farmers.
“It’s really more bullish for corn, because the prospect of buying corn is really there,” Payne said. “For beans I think they’ll just return to normal. If we can walk away with 5 million metric tons of exports (of corn), that’s a huge deal. That’s a major win for (Trump). I think he wants to get that done.”
With acreage projections set to be announced in the coming weeks, Payne said he isn’t expecting a hard shift toward corn, which only adds to the bullish ideas.
He said the issue with the soybean market is purchases China has made from South America during the trade war aren’t something the U.S. can simply make up for. Those are lost purchases.
“It’s not like they’ve been going without,” Payne said. “It’s not like they’ve been vacant from the grocery store for two weeks and when they come back they’ll inhale everything off the racks. They’ve been eating. So they are going to switch back to us, but they won’t come back aggressively.”
However, in the long term, Payne said he believes South America may ultimately be the losers of the U.S.-China trade war.
“Brazil has already zigged to meet the market,” Payne said. “Unfortunately for them, they could be the loser in all of this. If Trump cuts a deal and says ‘You are buying U.S. beans,’ they have to make up for what they’ve lost. Then Brazil will be on the short end of the stick.”