Farm Progress

Trade retaliations from China -- may just be hype-- find out why in the Grain Market Viewpoint.

Kevin Van Trump, Founder

March 23, 2018

1 Min Read

Soybean bears continue to talk about headline risk surrounding Washington and possible trade retaliations from China. I respect the risk and concern but personally don't see it happening, especially with continued talk that the Argentine crop could end up sub-40 MMTs.

It's hard for me to understand how China will feed their growing demand with a short crop in Argentina? Yes, they can source more beans from Brazil, but I suspect that only amounts to an increase of +5 to +8 MMTs for Brazilian exporters. The USDA is currently estimating Brazil's exports will be 66.7 MMTs, when in fact they could be more like 73 to 75 MMTs.

At some point however the Chinese are going to need more soybeans from the U.S., it certainly doesn't appear they can afford fewer U.S. soybeans. Just my opinion, but as a producer, I understand I have to respect the risk it could bring, especially if this tit-for-tat turns into a shootout.

As a producer, I like our current position, feeling like I've reduced enough longer-term risk to let the cards fall where they fall during the next 12-months. If we catch some bullish momentum, I'm in a position to really let the bulls run...

As a spec, I feel a bit confused nearby, but know I don't want to try and navigate a short position, especially with the crop in Argentina being so heavily damaged and global demand being so strong. Buying deeper breaks might interest me in the days ahead.

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About the Author(s)

Kevin Van Trump

Founder, Farmdirection.com

Kevin is a leading expert in Agricultural marketing and analysis, he also produces an award-winning and world-recognized daily industry Ag wire called "The Van Trump Report." With over 20 years of experience trading professionally at the CME, CBOT and KCBOT, Kevin is able to 'connect-the-dots' and simplify the complex moving parts associated with today's markets in a thought provoking yet easy to read format. With thousands of daily readers in over 40 countries, Kevin has become a sought after source for market direction, timing and macro views associated with the agricultural world. Kevin is a top featured guest on many farm radio programs and business news channels here in the United States. He also speaks internationally to hedge fund managers and industry leading agricultural executives about current market conditions and 'black swan' forecasting. Kevin is currently the acting Chairman of Farm Direction, an international organization assembled to bring the finest and most current agricultural thoughts and strategies directly to the world's top producers. The markets have dramatically changed and Kevin is trying to redefine how those in the agricultural world can better manage their risk and better understand the adversity that lies ahead. 

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