Producers who wonder where $12 soybeans went need only look to Brazil, where farmers are getting that amount plus change for the crop.
Tack on major moves in global currency and it becomes clear American agriculture must monitor its cost of production, advises Gregg Hunt, trader.
“This has all transpired on a flip since September,” notes Hunt on the “AgDay” Agribusiness Update.” So you perpetuate that, obviously what’s going on with the euro—that would be more of a wheat thing and/or feed wheat—and you throw that out there and what’s going on with Australia and their currency, too. All these guys are lowering their interest rates, along with China, except Japan. They can’t go any lower.
“Now you’ve got a situation where as we move forward, these guys are going to be more competitive to plant versus us. The situation you don’t want is we come back here next year and we’ve got low prices and the American farmer with the low, low prices below the cost of production will be the one who’ll have to cut back on acres where the Brazilians and everyone else won’t. That’s the situation you don’t want. That to me is the thing you’d better be quite aware of.”
Export Positivity. Additionally, producers must realize that contrary to the popular notion a strong dollar hurts ag exports, shipments actually have been quite strong, Hunt points out.
“We’ve done tremendous exports in soybeans and a lot better exports versus a year ago on corn,” he explains. “We’ve got the Chinese taking almost 300 million bushels of sorghum and then a massive amount of meal business. Of course, a lot of that had to do, too, with people that saw sticker shock with the price of the previous year, didn’t have the inventory, and boom. That’s how you can move a billion bushels of our corn out of here in two months back in the fall.”