U.S. farmers celebrate soy price surge as Brazil misses out
By Ana Mano and Mark Weinraub, Reuters
November 17, 2020
SAO PAULO/CHICAGO (Reuters) - U.S. farmers sold freshly harvested soybeans directly off their combines for a profit as prices rose to a four-year high this autumn, a welcome change from the losses suffered during the U.S.-China trade war.
Strong exports to China as the world's top soybean importer emerged from lockdown helped push the most-active soybean futures contract at the Chicago Board of Trade Sv1 up 12.3% between Aug. 1 and mid-September, when harvest kicked into gear across the U.S. Midwest.
But the unusual surge came too late for many Brazilian farmers, on the opposite southern hemisphere growing cycle, who had already committed to selling their crops at much lower prices and may now seek to renegotiate contracts with buyers.
Brazil ran out of the oilseed earlier than usual this year. It has sold so much to China that in recent weeks local companies had to import soybeans - a rare event for the world’s top exporter. Those imports included 30,000 tonnes from the United States. That is a tiny amount by global trading standards but the most U.S. soy Brazil has purchased since 1997.
Brazil had been the primary beneficiary of the U.S.-China dispute started by U.S. President Donald Trump in 2018 as China relied on South America for almost all its soybean needs. But global market forces are finally helping U.S. farmers.
After signing a “Phase 1” trade agreement in January, China started ramping up U.S. soybean purchases in the second half of the year, helping spur the largest late summer soybean price rally in 13 years.
U.S. farmers who waited for the harvest to start in September before selling their crops rather than committing them early were rewarded handsomely with sales straight from the fields to processors and elevators.
“For once it was the right thing ... Usually the best opportunities to sell for fall are March through June but the world came to an end in March,” said Norway Center, South Dakota, farmer Jed Olbertson, referring to the sharp decline of commodity prices as the COVID-19 pandemic hit the western hemisphere.
‘PROBLEMS WILL OCCUR’ ...