Rain, trade wars and swine fever

 

By Arvin Donley, World-Grain.com

08.05.2019

 

After a multi-year period in which global grain and oilseed stocks ballooned to record highs due to little disruption in output, the market is suddenly facing some adversity on the production side as well as ongoing disputes that are disrupting traditional patterns of trade.

 

An unprecedented wet spring in the Corn Belt of the United States has left nearly 7 million acres of corn unplanted, forcing farmers to decide whether to instead plant soybeans or some other crop or collect crop insurance. Meanwhile, the now yearlong U.S.-China trade war that has effectively halted U.S. soybean exports to China, as well as Britain’s impending exit from the European Union, known as Brexit, are adding uncertainty to once stable markets.

 

Speakers at this year’s International Grains Council Conference in London, England, addressed these issues at length as well as guaging the impact that the fast-spreading African swine fever (ASF), which is plaguing China’s pig population and threatening other regions, will have on the global grain and feed markets.

 

Robert Johansson, chief economist for the U.S. Department of Agriculture, told delegates at the conference, held June 11-12, the reduction in corn production in the United States would have a ripple effect on the rest of the world.

 

“It opens up an opportunity for southern hemisphere producers, for example,” he said. “We know Brazil is harvesting a record corn crop and looking to expand acres this coming year both in corn and soybeans and is seeing a premium for exports to China.”

 

He added that rising prices and tightening supplies could incentivize more wheat production in Ukraine and other parts of Eastern Europe.

 

“Ukraine, Russia and Kazakhstan are an increasing presence in the global grain markets, and they are poised for record production this year,” Johansson said.

 

From a U.S. perspective, Johansson said the strengthening dollar is weighing on its ability to export agricultural commodities. The global economy also is weighing on the global grain and oilseed sector.

 

“The International Monetary Fund’s most recent forecast calls for slower global economic growth,” Johansson said. “That will translate into lower demand for agricultural products.”

 

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https://www.world-grain.com/articles/12414-rain-trade-wars-and-swine-fever