While the U.S. hasn’t even initiated tariffs on Chinese goods that would trigger countermeasures from China targeting, in part, U.S. soybeans, importers are not waiting around for the current “war of words” to turn into a “trade war.” Demand for U.S. beans is increasing as Brazilian farmers have become strong holders of new-crop supplies in hopes of capturing a China-demand-led rally later this summer. That’s making U.S. beans ultra-competitive, attracting bean importers (not only China) to the U.S.
It’s that “redistribution of trade” that’s limiting pressure on bean futures and supporting U.S. bean basis, according to Doug Werling, Bower Trading, LaFayette, Indiana. Werling told Chip Flory on Friday’s AgriTalk After the Bell that China’s potential “one-source” bean-buying for an extended period of time is why he likes the “sell-and-defend” strategy in soybeans (as well as in corn and wheat). With prices back to breakeven or a bit higher for many growers, Werling says now is the time to consider increasing cash sales to lock in a price, but to keep upside price potential in place with futures and/or options.