Who will fill the demand void for exports?

The USDA has confirmed Argentina’s crop production will be affected by drought, but it remains unclear whether Brazil or the United States will fill the demand void on the export market.

Global Commodity Analytics and Consulting President Mike Zuzolo says the U.S. dollar remains strong, while the Brazilian real has been at two-week lows.

“That’s only going to increase the Brazilian’s competitiveness on the world marketplace and related to that is the geopolitical fall out we’ve yet to see due to strained relations between the U.S. and China.”

Zuzolo says China’s decision to buy Brazilian commodities might not only be to get the best deal.

“We are playing a more defensive position when it comes to the demand side of the equation for soybeans, probably the biggest defensive position we’ve played in 3 to 5 years. We really need to see supplies continue to shrink from Argentina.”

The U.S. Commerce Department says China was the top U.S. export market for agriculture in 2022, followed by Mexico, Canada and Japan. Argentina’s next crop production estimates are scheduled for March.

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