Why Didn’t Phase One Impact Recent USDA Supply & Demand Forecast

Expectations out of this week's USDA Supply and Demand Forecast was to show big changes in crop export prospects because of the recently signed Phase One agreement between the U.S. and China.  However, there weren't that many changes.  USDA's Chief Economist, Rob Johansson said there are three reasons why the China deal not impact the forecast.

“An increase in exports to China often times will come from a decrease in exports to another part of the globe.”

And the USDA report only shows net exports, not sales to any one country.  Secondly, the USDA report makes forecasts on a marketing year basis for crops.  The marketing year ends this summer, but the China purchase commitments were made on a calendar year basis.

“Any changes in China purchases could occur now, could occur in October, November; when we're harvesting our crop,” Johansson added.

And that's when prices for most crops would be lower, and the chances of sales higher.

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