The election of a new president in Argentina could eventually lead to policies that add a bearish tone to the global corn market, says Dustin Johnson, EHedger.
“With this fresh light coming in, we could definitely see them come back in and be a major player for corn exports, which would be one more competitor to deal with,” Johnson tells “AgDay” host Clinton Griffiths during the Agribusiness Update for Monday, Nov. 30, 2015. “That goes to my point about maybe long term this is not a great thing for corn. You’re seeing farmdoc[daily] pricing out really low prices all the way out to 2019. I don’t necessarily want to take that long of a view, but I’m just thinking it’s not a great outlook when you’re starting to see us not be the low-cost producer anymore.”
On the other hand, longstanding policies have made it tough to grow the crop in Argentina despite prime growing conditions.
“Their ground for growing corn is much better than it is for Brazil—not necessarily for the U.S.,” Johnson explains. “But they’ve been disincentivized by very low prices, high export taxes and just basically poor government policy, and very bad agro-business practices.”
In the short term, farmers should pay attention to the aftermath of Mauricio Macri’s election to see what kinds of soybean export incentives are put into place.
“After Dec. 10, we should start to see shortly after that some sort of plan laid out … and that would be probably more bearish than the market’s already priced in,” Johnson says. “But a lot of it already has been priced into the market at this point. We’re near the contract low.”
Click the play button below to watch the complete “AgDay” interview with Johnson.