Play Turner’s Take Podcast Episode 212
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In today’s podcast we go over what Phase One could mean for soybean prices in 2020.  We think soybean exports go back to pre-trade war levels.  That means an extra 200 in exports for old crop and we could be at 2.1 billion exports for 2020-21.  We also go over what this extra demand can do for soybean acres and prices.  Make sure you take a listen to Turner’s Take Podcast!
Soybeans
Below is my updated Supply & Demand table for soybeans. I touched on this yesterday with the July/Nov spread but I wanted to use the podcast to really get into the numbers.  At the very least we see old crop soybean exports (2019-20) increasing 200mm bushels to 1.975 billion.  Some may think that is optimistic but China needs soybeans, we have soybeans, and they need to buy US ag products to keep the tariffs from coming back.
I think for 2020-21 we can go to almost 2.1 billion. China has not bought many soybeans for the 2020-21 year yet. I think a bulk of their buying will come back to the US for the next marketing year (Sep 1 2020 – Aug 31 2021).
If I’m right, and I think these are conservative numbers, then 2020-21 acres have to come up to at least 88 million.  Anything less with a trend line yield means ending stocks are below 300mm and close to a 7% stock/usage level.  I think old crop needs to go to $9.50 and new crop needs to test $10 get more soybean acres.
If soybeans are 88mm acres (at least) that means corn is 91mm at best.  For 2020-21, new crop corn acres of 91mm and a trend line of 178.5 means we produce a few million more bushels than we use and ending stocks are around 2.1 billion.  That is with ZERO demand from China.  Corn is more of a wild card in this Phase One trade deal.  Maybe China buys corn for ethanol, maybe they don’t.  I am a lot more confident in their demand for soybeans and I bet the funds are thinking the same thing.
Moral of the story is Phase One is supportive of the markets.  Breaks will most likely be bought as funds still need to cover a sizable short position. I doubt the funds want to be short heading into the signing of the agreement.  Make sure you take a listen to the podcast to get our in-depth thoughts on the trade deal.

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Craig Turner – Commodity Futures Broker
Turner’s Take Ag Marketing: https://www.turnerstakeag.com
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