No Bull | The Five Spot

1 | Trade war, schmade war

Here is the real issue:

2 | Missing the forest for the trees

Now, I am not saying another trade war won’t have implications, but let’s not miss the forest for the trees.

China’s import growth has slowed all while Brazil’s production continues to expand.

What happens when production grows exponentially?

You unburden yourself of excess supplies by way of exports:

3 | It adds up

Same data, different view:

Collectively over the past five marketing years, Chinese imports of Brazilian soybeans have outpaced imports from the U.S. by a staggering 6 BILLION BUSHELS.

Let that sink in a bit (for reference, the US will produce a near-record 4.46 billion bushel crop this year).

Anyone blaming the 2018/19 disaster in soybeans on Trump alone needs to reconsider their ‘go-to’ sources of market intel. Be careful what narrative you are listening to in the weeks and months ahead because talking heads love to feed off the idea of a 2nd trade war which, while definitely impactful, the underlying issues are far more complex. 

4 | Soybean oil export sales, strong like bull

Soybean oil export sales for the week ending October 31 were a whopping 114,000 tonnes - the largest single week of sales in more than five years. Last week's sales were also the 7th largest week of all-time, larger than the previous eleven weeks of sales combined, and the same size as ALL sales in calendar year 2023.

Current commitments have reached an unprecedented 86% of USDA's current full-year export estimate with a full ten months remaining in the current marketing year - a number that USDA will be forced to revise higher in future WASDE reports, especially as most sales are for nearby shipment and the U.S. remains competitive in the world market.

5 | The oil shuffle

While the U.S. continues to see a resurgence in soybean oil export demand amid a rallying world veg oil market (led by palm), we also continue to import record amounts of fats and oils to satisfy growing biomass-based diesel feedstock demand.

Combined imports of used cooking oil, tallow, and canola oil set a record in September at 1.45 billion pounds led by a surge in both UCO (record high 693 million pounds) and the second-highest monthly tallow imports on record. 

Records were made to be broken, though as the U.S. will soon become more reliant on domestically-produced biomass based diesels and the feedstock (imports) needed for their production once 45Z goes into effect January 1.

For the full version of this post, visit NoBullAg.Substack.com.

Thanks!