Row Crop CEOS Talk International Demand03/08/2016
This year is stacking up to be a difficult year for row crop farmers.
For Indiana farmer John Cheesewright, future price forecasts look bleak. “It’s not a good outlook. They’re telling us it will be two, three, four years before prices come back where they were a year or two years ago,” he said.
That’s why generating more demand is a top priority for grain organizations, according to interviews with top commodity group leaders.
But building demand is a tough battle since the U.S. dollar is so strong.
“I think China’s overall demand for soy has remained relatively strong. Right now we’re facing a bit of headwinds in our exports because of the strong U.S. dollar, which hurts us and the devalued real in Brazil. That means their exports will be more attractive to the Chinese buyers,” said American Soybean Association CEO Stephen Censky.
While opportunities are in China, the country’s economic growth may be a concern. “I think they’re going to go through some bumps along the way but good news I think for our industry, soybean farmers, is that the Chinese people want to continue to eat well. That means they want to consume meat, poultry, fish pork, and that’s all good news,” said Censky.
But the relationship with China is complicated, especially when it comes to regulations. “As we look at challenges, certainly China is relative to their approval of biotech of products has been a major challenge and a major limitation for the U.S. corn industry. Again, we’re seeing some potential signs that there could be more approvals coming. China has increased the amount of ethanol they’re importing. There’s significant growth there. China is a large market and certainly a large future market opportunity,” said National Corn Growers Association CEO Chris Novak.
Sorghum producers say renewable fuels are one of their greatest avenues for new sales. That includes the possibility of more growth in Mexico. They’re looking at other markets too.
CEO Tim Lust of National Sorghum Producers sees opportunity for sorghum at a global scale. “Weekly sales have continued to be extremely strong. When we outside of China, the exciting part is that we have nine other countries who have bought sorghum this year and certainly the last couple of weeks. Pakistan is another country with aggressive purchases,” Lust said.
For NCGA, it’s Cuba. The island nation is not a large market, but an important one. “Our opportunity (is to) access to that market, provide the grain they need for their livestock industry. While it’s an area for significant growth and development, we do need to find ways to ensure the U.S. is treating Cuba just like any other potential trading partner,” Novak said.
For Censky, it’s India he sees as holding market potential.
“Their demand base is growing. They have a population that’s going to exceed China the next five to 10 years. They are wanting more meat in their diets. A lot of Indians eat poultry and eggs. There’s a lot of opportunity for growth there. I think we can see India emerge significant importer for many years to come,” Censky said.
For the National Association of Wheat Growers, that’s Japan. “We could always get closer to Japan. There’s opportunity there as well as what I identified earlier as Korea and the Philippines,” said National Association of Wheat Growers CEO, Jim Palmer.
For farmers, the demand picture is still being made for the year. That’s why they’re doing what they can at home, hoping for a profitable year. For Cheesewright, there’s still little optimism for the year ahead. “We’re below the cost of production right now. This is going to be a tough year, I’m afraid.”
All of the CEOs say they’re in favor of the Trans-Pacific Partnership. And while the ag ministers from each of the 12 countries have signed the trade deal, the legislatures from those individual countries must still adopt it.
Source: Betsy Jibben, Ag Day TV