Soy-Crop Bust Spurs China to Drain U.S. Bins: Commodities

[FarCenter]

U.S. soybean stockpiles are poised to drop to the lowest relative to consumption since at least 1965 after the worst drought in five decades decimated crops across South America, driving China to buy more from Midwest farmers.

Inventories will decline 20 percent to 172 million bushels (4.68 million metric tons) before next year’s harvest in the U.S., the largest grower, according to the average of 31 analyst estimates compiled by Bloomberg. This year’s 19 percent rally may extend another 11 percent by the end of June to $16 a bushel, according to Linn Group, a brokerage and researcher based in Chicago. Prices reached a record $16.3675 in 2008.

The U.S. Department of Agriculture cut its forecasts for the South American crop four times in as many months after predicting record supplies as recently as December. The estimates are scheduled to be updated May 10. Imports by China, where demand doubled since 2004, will advance to a record 55 million tons this year as farmers feed a hog herd expanding 4.4 percent to a record 690 million animals, USDA data show.

“Prices may top the 2008 peak if Chinese demand doesn’t slow or there are any threats to the U.S. crop this summer,” said Christopher Narayanan, the head of agricultural commodities research for Societe Generale in New York. “China’s soybean imports have grown at a rate of more than 17 percent annually the last 10 years, and the biggest risk is that demand won’t slow.”

http://www.bloomberg.com/news/2012-05-07/soy-crop-bust-spurs-china-to-drain-u-s-bins-commodities.html

[Zalatix]

1. That means higher prices for us. Yay.

[FarCenter]

4. Agricultural products are one of the few things we export

Gotta pay for those iPhones and iPads somehow.

We're running about a $500 billion / year trade deficit as it is.

[Zalatix]

6. With a deficit that big the point is not to increase exports.

Our exports will never in a million years match our imports if the status quo is maintained.

The best move is to cut imports, drastically.

This can be done with tariffs, or for those who don't like tariffs we can simply wait until the status quo is shattered by the devaluation of the dollar. By the way, large trade deficits naturally devalue the dollar. So the end of imports is an inevitable situation.

[Uncle Joe]

2. Kicked and recommended.

Thanks for the thread, FarCenter.

[no_hypocrisy]

3. They're buying Soy-lent Green, that is, GM soy beans.

Almost 80% of soy grown in this country has been genetically engineered.

[FarCenter]

5. I'm sure the Chinese know that

China is doing cutting edge research in cell and molecular biology, and may be ahead of the US in plant science, since so much of our research is focused on human medicine.

They prioritize feeding people, while our priority is on extending life. It's a different stage of development.