U.S.-China trade deal could boost soybean prices: Agostino

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Corn growers should look to sell their crops at $6 per bushel this year, while soybean prices could top out at $13 per bushel, says a commodity expert.

By: Tom Morrison

Corn growers should look to sell their crops at $6 per bushel this year while soybean prices could top out at $13 per bushel, a commodity expert says.

Moe Agostino, chief commodity strategist with Farms.com Risk Management, said corn prices eventually reached that high last year.

“It took a while for that to happen, but I think we can get there again this year,” he said while speaking to an audience at the Chatham-Kent Farm Show on Wednesday.

Agostino also suggested selling soybeans at $13 last year, but he acknowledged prices didn’t reach that level.

“We didn’t have that Chinese demand,” he said. “There was too much production and the yield in the U.S. wasn’t low enough.”

However, he said that price is possible this year, with the U.S. having signed Phase 1 of a trade deal with China.

“It looks like it may be back-end loaded, whereby demand shows up later in the year,” said Agostino, whose presentation was sponsored by Sevita International, a soybean genetics company.

Soybean prices in the last few years have usually reached $11.50 to $12 per bushel, with $12.50 being the top end, according to Agostino.

“We haven’t seen beans in the teens in a while,” he said. “You’d probably have to go pre-2017 or something like that. It would be a nice change for the farmers after a very challenging harvest and planting season this past year.”

Prices are usually at their best in the first half of the year, though they always change based on “demand or supply factors,” he said, adding farmers can do a better job at taking advantage of the high prices.

“They seem to be like a deer in a headlight,” he said. “They kind of get lost. ‘Oh, well it’s a good price, but maybe it’s going higher,’ and of course they get busy and they take their eye off the ball.”

Agostino said a lot of farmers end up putting their remaining harvested crops in storage and wait until the next year “when the seasonal rally happens again and maybe they take advantage of that price at that point.”

He said this is an option, but storage also has a cost.

The new U.S.-China trade deal could be a “game changer” if it works out, he said, but it’s still possible for China to back out or U.S. President Donald Trump to raise tariffs again.

“Of course there are lots of risks because it’s Phase 1 and then we’ve got to get to Phase 2, maybe Phase 3 or a comprehensive deal at some point in the next two years,” he said.

“I think it’s a good thing for ag and farmers and I think we can get back to some sort of normalcy – I guess, if there is a new normal – maybe sometime next year.”

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