Security Issues on Korean Peninsula
North Korean leadership continues to threaten military action against South Korea and the United States after warning of a nuclear attack.
Published: May 18, 2013
North Korean leadership continues to threaten military action against South Korea and the United States after warning of a nuclear attack. A series of events that began with a nuclear weapon test in February has escalated to the point where North Korea feels that communications with South Korea should be shut down because war could break out at any time. These events have caused economic slowing in South Korea, a key import buyer of U.S. agricultural goods.
Moisture brings relief and concerns
It took a while, but rain and snow have finally come to the Plains and Midwest in March and April. Drought monitor readings have improved across the nation's breadbasket from Texas to Ohio, leaving some with excess moisture this spring. Corm farmers in the Midwest have gone from worries about being too dry to concerns about timely planting.
United Kingdom has become a wheat buyer
The UK has become a net importer of wheat this year after a disappointing 2012 wheat crop and the need for quality crop that currently does not exist within their borders. Most of the imported wheat is coming from Germany, with a smaller amount being delivered from the U.S. Concerns about the 2013 crop have end users believing that the country will remain a net importer of wheat in the next year.
Large South American soybean crop shrinking
Recent reports by Argentine and Brazilian government agencies have reduced the soybean crop size in both countries do to weather and logistics issues that have hampered growing, harvest and delivery of the crop. In Argentina, the Buenos Aires Grain Exchange has pegged the soybean crop at 48.5 MMT, below the USDA estimate of 51.5 MMT. CONAB in Brazil has estimated their crop to be 81.94 MMT, also lower than USDA estimates of 83.5 MMT.
Chinese Economy Getting Mixed Signals
Economic growth in China rebounded at the end of 2012, but may be slowing again after a series of mixed economic reports and another avian flu outbreak. A slowing Chinese economy that is having issues with its large poultry industry could impact the U.S. shipment of corn, wheat, and soybeans later in the year.
A weak global economy has slowed the growth in exports from China, while growth in their economy has seen an increase in imports, especially in capital goods, agricultural products, and technology. March actually saw trade deficit in China as imports exceeded exports for only the fourth month since 2005. In addition, the producer price index continues to move downward, suggesting demand for raw materials in China is slipping after the new government slowed some of the major state run projects that have kept the economy in the growth mode.
Inflation in the country has moved to lower levels, giving the government some options in terms of monetary policy to stimulate the economy if growth numbers continue to slow. In addition, the large increase in imports suggests that demand for goods is strong and the economy is capable of growth in the future.
The H7N9 flu virus has infected several people and is negatively impacting the large poultry industry as birds are destroyed in several provinces impacted by the disease. Sales of live birds have been banned in some areas until the outbreak can be contained and safety is assured. Birds affected with the H7N9 virus do not always show signs of illness, leaving the industry with some concerns as to whether or not more birds will be destroyed than necessary to combat the flu outbreak. From a U.S. grain and soybean export perspective, feed use is likely to slow with the reduction of poultry numbers and a corresponding concern in the hog industry where several thousand dead pigs have been pulled from rivers recently.
Strength in the U.S. soybean market has been dependent on a very strong export market driven by an insatiable demand for beans from China, so any long term effects that may come from either an economic slowdown or health issues in their poultry or hog industries could have far reaching impacts.
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Tagged: soybean crop, usda, Drought