The agricultural market is always changing, but there are ways for producers to stay ahead and seize some opportunities. Parts of South America will be harvesting 11 to 12 tons more soybeans than they ever have before while others will be down 50%. Economist Dan Basse of AgResource Company shares some insight into how this affects prices here in the U.S.
“It’s really a strange season for South America,” explains Basse. “Brazil is an area of abundance. In fact, to the degree that there was a while that the ports of Brazil stopped taking soybeans because there was so much supply, they didn’t have storage for all that.”
Brazil will be harvesting 153 million tons of soybeans this year, which is about 12 million tons more than they’ve ever cut. Basse says while they are doing well, across the border in Argentina, it is a disaster as they’re yields will be down 40 percent.
“Ultimately with that being said, I’m believing that US soybeans will rise to new highs this summer because of what’s happened in Argentina,” says Basse.
He believes that the next drivers of agriculture will be the Ukraine, Russia, and Black Sea area and Latin America. In the Ukraine area, there are still 17 or 18 million acres left over from the old collective farm system that can be brought under plow. If war continues on, some of that farmland will be tainted and take a generation to get back into productive capacity. Latin America has about 14 million acres that can be brought under plow.
Ukraine is suffering mightily and it is an agricultural state. Basse believes that the Russians will see a diminishment of their export capabilities in the year ahead, because they’re not going to be blessed with the supply of wheat. He says Wisconsin and US farmers need to pick up some of that slack in the middle of the year and beyond as it is key to the world in terms of getting that available ability coming forward.
Basse adds, “My problem is that the world will likely add a billion people in the next eight or nine years. We will need about 25 million extra acres to feed everyone so we need areas to step up in the next five to six years”
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