Argentina

'The System Is Failing Us:' Why Real Change is Needed in U.S. Agriculture

Wed, 29 Oct 2025 13:57:31 GMT

Joe Maxwell doesn’t pull punches — especially on the topic of the future of American agriculture.

“The system is failing us,” says Maxwell, co-founder of Farm Action , during a recent episode of “Unscripted.” “It’s failing the people. It’s failing family farmers and ranchers. And it’s failing consumers. We can’t keep pretending everything’s fine.”

The Missouri farmer and former lieutenant governor shares an uncomfortable truth: The economic model that has shaped U.S. agriculture no longer works for those producing America’s food.

Commodity prices remain under pressure, input costs stay stubbornly high and government payments — while keeping some farms afloat — often mask deeper structural problems.

“We’re on this hamster wheel,” Maxwell says. “Government sends out a bailout, input companies raise prices and the money flows right back up to them. We think we’re being helped, but really, we’re just passing the money through.”

From Missouri Roots to National Reform

Maxwell grew up on a family farm in Missouri and lived through the 1980s farm crisis. That experience shapes his conviction that policy, not luck, determines who survives in agriculture.

That belief lead him and Ohio farmer Angela Huffman to co-found Farm Action, a nonprofit working to “connect the dots” between policy decisions, corporate consolidation and on-farm economics.

“We see a need for a farm organization that looks up and down the entire food chain,” Maxwell explains. “Everyone’s focused on one part of the system — fertilizer here, seed prices there, meatpacking somewhere else — but no one connects them. Farm Action connects those dots and pushes for policy that works for independent producers again.”

“We Don’t Feed the World Anymore”

Maxwell challenges one of agriculture’s most familiar slogans.

“Let’s be honest — we don’t feed the world anymore,” he says. “We import 60% of our fruit, over a third of our vegetables and record amounts of beef. We have a $47 billion agricultural trade deficit. The world is starting to feed us.”

He argues that U.S. farm policy has become overly dependent on exports of feed and fuel crops, while overlooking food crops and livestock production that directly feed Americans. Maxwell calls for farm programs that reward food production rather than commodity production.

“Every year we lose up to 1.8 million acres of pasture to row crops,” he notes. “That’s a failure of policy. We make it easier and more profitable to grow corn for fuel than to raise beef or vegetables for food. That’s not national security — that’s national vulnerability.”

“Let’s quit lying to ourselves. We don’t feed the world anymore — the world is beginning to feed us.”— Joe Maxwell, Farm Action

The Growing Grip of Consolidation

Maxwell points to consolidation as the most dangerous — and least understood — threat facing independent producers. From fertilizer and seed to meatpacking and grocery shelves, he says control has concentrated into the hands of just a few corporations.

“The power dynamic in agriculture has flipped,” Maxwell explains. “Farmers used to have leverage. Now, a handful of companies control nearly every input we need to farm — and they set the prices we pay. Then they control the markets we sell into, and they set those prices, too. That’s not a free market — that’s corporate feudalism.”

He points to Farm Action’s Concentration Tracker, a public data hub that compiles market share information across the food system. It shows that:

Four companies control over 80% of beef processing.
Two companies dominate more than 75% of corn seed genetics.
Three firms hold the majority of fertilizer production capacity.
The top five grocery chains now capture nearly 65% of all food retail sales.

“When just a few players hold that kind of power, they don’t compete — they coordinate,” Maxwell says. “They can raise input costs and suppress farmgate prices, and farmers have no real alternative. That’s why our concentration tracker matters — it exposes what’s really happening behind the curtain.”

The problem, he says, isn’t just economic — it’s political.

“These corporations have so much money and influence they shape farm policy to fit their own balance sheets,” Maxwell adds. “When we go to Washington asking for help, they’re already there, writing the rules. Until we restore fair competition and transparency, every bailout, every policy tweak is just feeding the beast.”

Farm Action’s data shows concentration doesn’t just hurt farmers — it hurts consumers, too. From fertilizer to feed to food, fewer companies mean higher costs for everyone.

“You see it every time you go to the grocery store,” Maxwell says. “Beef prices are high, but cattlemen aren’t seeing that profit. Fertilizer prices spike, but farmers don’t control the market. Consumers pay more, farmers earn less, and the middle consolidates the wealth. That’s not sustainable for anybody.”

It’s a concept gaining national traction. Just this week, the Senate Judiciary Committee held a hearing on the soaring costs of inputs.

Sen. Charles Grassley (R-Iowa) also introduced legislation to address the rising costs of inputs, called the Fertilizer Research Act . But the hearing brought together the larger issue of rising costs across the board for farmers.

“This hearing is focused on competition issues. However, there is something that the Trump administration can do right now to help ease the burden for farmers: lowering the countervailing duties on phosphate from Morocco. In 2024, the Biden administration increased duties on Moroccan phosphate to 18%,” said Grassley in his opening statement. “The Biden phosphate duties have only hurt farmers by boxing out access to this important market on an essential input with no substitute. I’m calling on the Trump administration to help American farmers and get rid of the Biden phosphate duties.”

The Beef Debate: “We’re Blindsided”

For ranchers, the issue of consolidation has long been a point of contention. But recent comments by President Trump sparked a renewed push for change and a probe into who and what really controls the prices consumers are paying.

When the White House signaled it will allow more beef imports from Argentina , Maxwell says many ranchers feel blindsided.

“Our cattle herd is at a 70-year low,” he says. “Ranchers finally see light at the end of the tunnel — and then Washington steps in to import more beef. That’s not just a policy mistake, it’s a psychological one.”

He argues that the frustration isn’t only about imports; it’s about the perception that the administration doesn’t understand the complexity of the cattle market.

“Cattle producers don’t set the price they’re paid — packers do,” Maxwell explains. “So when the president talks about lowering prices for consumers without addressing packer control, he’s aiming at the wrong target.”

“We’re finally seeing the light of day. Then government puts its hand back on our backs.”— Joe Maxwell on the U.S. cattle market

“It’s Time for DOJ to Step In”: Why the Beef Industry Needs an Investigation

He says instead of the Trump administration focusing on cattle prices, Farm Action thinks what happened in the egg industry during past price spikes is exactly what needs to happen now in beef: a full federal investigation.

“Two companies control 90% of hatcheries in the U.S. egg industry,” Maxwell explains. “When egg prices exploded, Farm Action presented evidence to the Department of Justice showing that those companies were profiting at historic levels while blaming avian flu. And you know what happened? DOJ opened an investigation. That’s what accountability looks like.”

Now, he says, the same pattern is playing out in beef.

“We’ve already seen price-fixing cases in the cattle sector,” he says. “Two of the major packers admitted it back in 2019. We shouldn’t have to spend years in court to prove what every rancher already knows — that a handful of companies are manipulating the market.”

The so-called “Big Four” — Tyson Foods, JBS, Cargill, and National Beef (controlled by Brazil-based Marfrig) — control roughly 85% of U.S. beef processing capacity. That concentration, Maxwell argues, allows them to influence both the price paid to producers and the price charged to consumers.

“It’s an abusive system,” Maxwell says. “They squeeze ranchers on one end and shoppers on the other, and everyone in between gets caught in the middle. The packers are the only ones guaranteed to make money, no matter what happens to the market.”

He calls for the Department of Justice to launch a new, comprehensive investigation into price manipulation and anti-competitive behavior within the beef industry — similar to what Farm Action pushed for with eggs.

“We need DOJ to do in beef what it finally did in eggs,” he says. “Follow the money, follow the profits, and hold these corporations accountable. Because right now, the people who produce our beef — the ranchers who’ve weathered drought, inflation, and decades of consolidation — are getting crushed while multinational packers report record margins.”

Maxwell says the Biden administration has taken small steps, but much more needs to be done.

“It’s not enough to tinker at the edges,” he warns. “We need enforcement — real enforcement — of the Packers and Stockyards Act, the Sherman Act, the Clayton Act. The laws are already on the books. What’s missing is the will to use them.”

Country-of-Origin Labeling: A “No-Brainer”

Maxwell says Farm Action is pushing hard for mandatory Country of Origin Labeling (M-COOL) as part of the upcoming USMCA review in 2026.

“Consumers deserve to know where their beef comes from,” he insists. “The president could fix this tomorrow by negotiating M-COOL into the trade deal. That one move would give American ranchers a fair shot.”

He dismisses claims that M-COOL violates WTO rules.

“WTO is dead in the water,” Maxwell argues. “There’s no functioning tribunal to even hear a case. The only people fighting this are the packers — JBS, Tyson, Cargill, Marfrig — because they profit when foreign beef gets a U.S. label.”

Structural Change, Not Another Bailout
When asked whether Farm Action supports another round of USDA bailouts for struggling producers, Maxwell doesn’t hesitate.

“We recognize farmers are in crisis,” he says. “We don’t want to see our neighbors driven off the farm. But we can’t just keep sending out checks without fixing the system. One day those bailouts won’t come, and then it’ll look just like the 1980s. We have to demand structural change.”

Those changes, he says, should include:

Capping farm subsidies to slow consolidation.
Rebalancing insurance and incentive programs toward food production.
Rebuilding local and regional processing capacity to compete with the “Big Four” packers who control 80–85% of the cattle market.
Stronger enforcement of antitrust laws like the Packers and Stockyards Act and the Sherman Act.

Rebuilding from the Ground Up

Despite his criticism, Maxwell frames his message as one of hope — if farmers and ranchers take the lead.

“We can’t sit back and wait for Washington to fix this,” he says. “We have to step up, be part of the conversation, and demand policies that keep family farms in business.”

He supports Rep. Thomas Massie’s Prime Act, which would expand small-scale meat processing and let states regulate local slaughterhouses directly.

“We’ve got the infrastructure,” Maxwell adds. “We just need to give it life again. Let’s rebuild local processing so farmers can sell directly to consumers and keep value in their communities.”

Why It Matters Now

Fresh data from the Farm Journal Ag Economists’ Monthly Monitor shows that 76% of agricultural economists expect conditions to persist or worsen over the next year. Many see echoes of the 1980s — though they warn today’s crisis is more complex.

“It’s not the 1980s all over again,” says Unscripted host Tyne Morgan. “But the pain is real. Economists say the situation could worsen in 2026 if structural issues aren’t addressed. That’s what makes conversations like this so important.”

A Call to Action

As the conversation wraps up, Maxwell’s tone shifts from urgency to determination. His message to rural America is both a warning and an invitation.

“We have to lead,” he says, pausing before adding, “because no one else is going to do it for us.”

He says the future of U.S. agriculture depends on whether farmers choose to engage in these hard conversations — the ones about fairness, policy, and the future of independent family farms.

“Look, we can’t afford to sit on the sidelines and hope someone in Washington suddenly understands our way of life,” Maxwell says. “Every farmer, every rancher, every person who believes in feeding people instead of feeding systems has a role to play. It starts at the local level — showing up, speaking up, refusing to accept that the current model is the only way forward.”He continues:

“This isn’t about right or left, or about politics at all. It’s about survival — for the people who feed this country. We can’t keep patching the same broken system and expecting it to serve us. If we want a food system that’s fair, resilient, and rooted in our rural communities, we’ve got to build it ourselves, together. That’s the hard truth — and the hopeful one.”

Maxwell’s words linger long after the conversation ends — a challenge, but also a call for courage. Change, he insists, isn’t something that happens to farmers. It’s something that must happen through them.

Listen to the Full Conversation

Listen to the full interview: “Unscripted” with Tyne Morgan and Clinton Griffiths featuring Joe Maxwell, a vailable on Farm Journal’s YouTube channel and anywhere you stream podcasts.

'Everything’s a Game of 3D Chess': The Real Reason Behind U.S. Ties to Argentina

Fri, 24 Oct 2025 19:32:25 GMT

The U.S. is tightening ties with Argentina, and that’s raising eyebrows across farm country.

From a $20 billion bailout to plans to import Argentine beef, farmers and ranchers say the growing alliance feels like it’s coming at the expense of U.S. agriculture.

But according to Arlan Suderman, chief commodities economist with StoneX, there’s more to this story, and it has everything to do with China .

A Geopolitical Chess Match

“Everything’s a game of 3D chess,” Suderman explains. “At the center of it is China.”

For years, China has been strengthening ties with Argentina, investing heavily in infrastructure and agriculture to secure long-term supply lines and influence. Suderman says the U.S. sees an opportunity to pull Argentina away from Beijing’s orbit, using economic incentives to win its allegiance.

“The White House sees this as a way to create a split between Argentina and China,” Suderman says. “It’s not just about soybeans or beef. It’s about global positioning.”

The Beef Backlash

But for cattle producers, that strategy feels like betrayal. President Donald Trump’s recent talk of importing Argentine beef sparked anger across rural America. Many worry increasing imports will undercut domestic markets.

Suderman urges producers to stay calm. He points out the announced beef imports, around 80,000 metric tons, are only equal to about two day’s worth of U.S. beef production.

“It’s not enough to impact prices,” he says, “but it does show a disconnect between Washington and agriculture.”

He adds that advisers to the president might have misunderstood how ag markets work.

“These aren’t controlled industries like pharmaceuticals,” Suderman notes. “Ag markets are driven by supply and demand, and right now, we have record demand with tight supply.”

Soybean Farmers Feel Left Behind

While beef producers protest, soybean farmers are already bruised. Argentina’s temporary suspension of export taxes earlier in the year allowed them to undercut U.S. prices and quickly sell beans to China — a major blow to American growers. Suderman says it’s a reminder that the U.S. is no longer the world’s low-cost soybean producer.

“Argentina and Brazil have a cheaper currency and lower costs,” he explains. “And China has been investing there for decades.”

Suderman says he’s been warning the industry for years that the U.S. would eventually lose China as its top soybean buyer.

“This didn’t happen overnight,” Suderman says. “China has been building toward this for 20 years. The current administration may have sped it up, but it was coming.”

Beijing’s refusal to buy American and its pivot to Brazil could be less about economics and more to do with politics. “It’s a calculated decision about control and national leverage, not about getting the cheapest beans,” says one ag economist. Read more here.

Caught in a Bigger Battle

Beyond agriculture, Suderman says the real fight isn’t over soybeans — it’s over rare earth minerals. China currently controls about 90% of the world’s processed rare earths, which are essential to making electronics and advanced defense systems.

“That’s the real leverage,” he says. “Soybeans are small compared to the rare earth battle.”

The Trump administration is now trying to expand domestic rare earth supply chains, sourcing from Australia, Greenland and even within the U.S. But Suderman says it could take two to three years before those efforts meet national defense and economic needs.

What Farmers Need to Know

To many farmers, Washington’s global strategy feels like it’s coming at their expense. While the administration is playing the long game with China, rural America is paying the short-term price. Still, Suderman sees opportunity ahead if the U.S. can continue developing new markets, strengthen biofuel demand and tap into growing trade opportunities in Africa and beyond.

“We weren’t ready to give up China,” he admits, “but we need to look forward not backward.”

How Current Weather Trends Are Shaping Global Grain Production

Tue, 21 Oct 2025 20:36:51 GMT

Kevin Marcus of Marcus Weather Consulting gives the areas to watch as harvest goes into the home stretch in the northern hemisphere and the growing season is shaping up in the southern hemisphere.

Looking at the U.S., South American and Chinese weather patterns, here are his takeaways on the impact and outlook of weather:

U.S. harvest season is a mirror of 2024 in many ways.

Marcus says for many in the Midwest, September and October are echoing patterns this time last year being warmer and dryer than average.

He notes two earlier weather patterns in the year are bringing attention to their impact on yields.

In the eastern corn belt, the prolonged heat may have dinged yields.

“We had lots of warm night sin July and August,” he says. “For some, it was the highest numbers since 2010 and 2011.”

When nighttime temperatures remain elevated, the respiration steals from grain development resulting in shallower kernels.
In the western corn belt, the focus is on the favorable conditions for disease—including the expansion of southern rust.

“We’re seeing southern rust stealing 40 to 50 bu/acre in fields that were left untreated,” Marcus says. “Iowa was the epicenter of the problem, and if just 10% of the fields weren’t sprayed properly at a 50 bu loss, that’s 5 bu. off the state yield. And 1 bu. off the national yield.”

You can hear more about his weather analysis and the effect on yield estimates here:

La Nina is a factor.

Marcus is watching the development of La Nina, warmer waters in the eastern Indian ocean and systems and patterns developing in southeast Asia. He says it all adds up to polar jet getting invigorated.

As such, he sees “more of a slug” for the finishing weeks of corn harvest across the Midwest.

And this winter, especially compared to last year, he sees wet heavy snow across the northern plains starting in November.

Questionable start for the southern hemisphere.

As Brazil and Argentina’s growing seasons get kicked off, there’s cooler and less wet weather.

“This isn’t typical. It usually rains every other day. Now it’s only raining once a week. And temperatures are popping above 100 degree. Young crops are being stressed early,” Marcus says.

Looking ahead, he notes there aren’t any “red flags” for the weather dramatically effecting yields, but there is definitely risk in the forecast.

China’s domestic production is a question mark.

Marcus says a developing story to watch are yields for the Chinese corn crop.

“We just came through seven weeks of exceptional rain in the north China plains,” he says. “When corn can’t be harvested, and you’re getting rains every other day for seven weeks, you have an idea of what that quality will look like.”

When a comparable weather pattern occurred in 2022, Marcus points to private estimates stating a loss of 30 million metric tons.

Here's Why Analysts Are Scratching Their Heads After USDA's New WASDE Report

Thu, 11 Apr 2024 21:41:28 GMT

USDA’s monthly look at supply and demand offered a few surprises, including the lack of changes to South America’s crops. The April World Agricultural Supply and Demand Estimates (WASDE) showed larger wheat and soybean ending stocks, but smaller ending stocks for corn.

USDA’s estimates for corn, soybeans and wheat ending stocks all came in higher than what the trade expected.

• Corn ending stocks: 2.1 billion bushels, 50-million bushels lower than last month
• Soybean ending stocks: Up 25 million bushels to 340 million
• Wheat ending stocks: 698 million bushels, up 25 million bushes

“The cut in corn ending stocks have certainly been justified,” says Arlan Suderman, chief economist for StoneX Group. “Cheap prices generate demand, and that’s happening in corn. I think the bigger cuts yet to come are going to be related to added ethanol demand.”

Suderman says if you look at the marketing year to date, ethanol use for corn exceeds the seasonal pace needed to hit USDA’s newly revised target by 98 million bushels.

“We could see that ethanol demand go up considerably, yet we’re still going to be above 2 billion bushels. So I don’t want to get anyone overly bullish on that,” says Suderman.

On soybeans, Suderman says the 25-milion-bushel increase in ending stocks was caused by USDA’s cut to soybean exports.

“I think that was justified, but they continue to hold the line on crush, and I think they’re going to be forced to increase crush,” says Suderman. “And that’s going to pull us back toward that 300-million-bushel ending stocks estimate, still not bullish, but not as bearish as where they currently have us.”

South American Numbers are Suspect

USDA made small changes to South American crop production numbers by lowering corn production in Argentina by 1 mmt. Those revisions were due to drought’s impact on the crop there. USDA made no change to Argentina’s soybean crop estimate.

The agency also made no changes to its forecast for Brazil’s corn or soybean crop size. Chip Nellinger, owner of Blue Reef Agri-Marketing, says USDA’s updated South American crop forecast was the bigger surprise in Thursday’s report.

“To me, the biggest surprise is the lack of changes that we saw from the USDA versus some of the numbers that are coming out of like CONAB and the Rosario Grain Exchange in Argentina. It just seems like USDA has a massive disconnect, still about a 500-million-plus-bushel difference with where CONAB came out on Thursday versus where the USDA came out for the Brazil bean crop.”

Nellinger says the difference in estimates is also leaving traders confused.

“It is going to have a direct influence, no matter what the crop size is on our exports. I think there’s still some unknowns out there as far as what the ultimate crop size is in the Southern Hemisphere,” says Nellinger.

What Now?

Now that USDA’s April report and the Prospective Plantings report are both out of the way, Nellinger says the market will shift its focus to planting and the weather forecast in the U.S. Currently, it’s a story of the East versus the West, with dry conditions continuing to consume the areas west of the Mississippi. In the east, more rain means not as much planting is underway.

“It was this way last year, as well,” says Nellinger. “You look at the drought map that came out this week, even though there were some decent rains around there in the western Corn Belt, it’s still a worse setup at this point in the calendar than what we had in 2012. I’m not saying we’re going to have a repeat of the 2012 growing season weather, but there needs to be some regular rainfall in that western Corn Belt during the growing season.”

Nellinger says the dry weather will initially be a bearish factor for the grain markets due to the quick planting pace, but he says there’s a tremendous amount of uncertainty about how the weather could shift during the growing season.

“Just add on about the wheat. We’re going to need some rain in the Black Sea area and in Russia, and we’re going to need rain in the Southern Plains to get the wheat crop worldwide across the finish line,” says Nellinger. “So, there’s still some question there. And then when you look at how planting is going and this line of what La Nina will mean to summer temperatures and rainfall, especially the western Corn Belt. There’s just a tremendous amount of uncertainty going forward.”

El Nino's Effect on Crop Prices

Tue, 14 Nov 2023 15:00:00 GMT

A rebound in South American crops has been anticipated by traders for a long time. The focus for months has been the “big” crop coming in the southern hemisphere and the competition U.S. soybean farmers could suffer.

Recent WASDE reports had assumed another record Brazilian soybean crop and Argentina returning to normal, but the El Niño weather pattern might have something to say about that.

El Niño causes the waters of the Pacific Ocean to warm and normally has an impact on the world’s climate. In Brazil, it usually brings a drier climate in the north and northeast and rain in the south. The effect in Argentina is a wetter year beginning with a wet spring (Sept. to Nov.)

The table below reflects the potential for an increase of 31 million metric tons (mmt) or about 1.2 billion bushels. WASDE has recognized the importance of the U.S. losing exports to a whopper crop by lowering U.S. exports this year to 1.76 billion bushels. This is compared to the past three years of exports at 2.26, 2.16 and 1.99, respectively.

Yet when supplies from all sources are put into WASDE’s global supply and demand tables, U.S. carryout is seen as 245 million bushels or about 6.5 mmt. The importance of El Niño becomes apparent.

Change in Perspective
Total 2023/24 production in Brazil and Argentina is seen at about 211 mmt. The U.S. carryover of 6.5 is only 3% of that total. If Brazil would have an El Niño production comparable to last year’s record, the 7 mmt shortfall would offset the U.S. total carryover. Suddenly, the perspective changes.

Sources in Brazil say crop potential has already been reduced by 2 mmt to 3 mmt. Further implications for replant and delayed planting suggest supplies out of Brazil will, at a minimum, be delayed.

As a result, this delays the country’s safrinha corn planting and affects their yield by 2 mmt to 3 mmt as well. Reductions due to too wet and too dry conditions is yet to be determined but is currently on the radar of global traders.

Market psychology is a big part of price discovery on a day-to-day basis. Price adjustments come quick and pronounced as well. While corn and wheat gave back all their gains realized in the two-year bull market, soybeans managed to lose only 50%.

The reason is there are only two producers who share nearly 100% of exportable supplies. For corn, there are four: the U.S., Argentina, The European Union (EU) and Ukraine. There are seven major producers of wheat: the U.S., Canada, Ukraine, Russia, EU, Australia and Argentina with India as a smaller exporter.

Generally, when a major exporter has a problem with exportable supplies, other players make up the difference. Everyone grows some wheat, but most must import some. With two big exporters of soybeans, the implications are huge, and a reduction in exportable supplies by one can significantly affect price.

Market perception (psychology) can be under appreciated when it comes to price discovery.

Argentina Soybean Crop Smallest in 25 Years Due to Historic Drought

Mon, 24 Apr 2023 21:38:24 GMT

A historic drought has severely cut the size of this year’s crop in Argentina, especially soybeans, and there are other headwinds for agriculture, including runaway inflation, an export tax and deflation of their currency, the peso, at play.

The market has been watching Argentina’s crop shrink throughout the growing season, which has supported U.S. prices, especially soybean meal. The Buenos Aires Grain Exchange pegs corn production at 36 million tons and it just lowered the soybean crop estimate another 1.5 million to 22.5 million metric tons.

The cut came as harvest has progressed and yields have been coming in even lower than expected. Market analysts there believe the final crop will be even lower than current estimates and less than half of normal. This makes it one of the smallest crops in nearly 25 years.

Sol Arcidiacono, head of the Latin American Grain Desk with Hedge Point Global Markets, says: “We are going to have a cut in production of 50% considering when we were seeding last November December. I think we’re going to be close to 20 million tons. This is really low. I have been in this industry for 20 years and I have never seen such a small crop.”

She says this will result in the No. 1 soybean meal exporting country in the world having to import around 10 million metric tons of soybeans just to keep their processors in business.

“It is going to be a challenging this year.” Arcidiacono says. “Argentina has crushing capacity of 60 million tons, and we are going to have a crop of almost 22 to 23. There’s going to be a big gap we will have to try to fill with imports.”

At the same time, the ag businesses and farmers in Argentina are also facing some of the highest inflation in history at more than 100%. This is why farmers there have been reluctant to sell their soybeans because they are holding the crop as a hedge against inflation.

As a result, the Argentina government instituted a soy peso program or preferential exchange rate to boost soybean exports. The first program in September generated around 7 million tons of soybean sales in a month, while farmers have only sold 1 million this round. The program lasts until May 31.

Here’s Why Traders Weren’t Impressed with USDA’S December Crop Reports

Wed, 13 Jan 2021 22:55:31 GMT

While USDA didn’t make many changes to the U.S. crop balance sheet on Dec. 10, traders sold the market. As a result, commodity prices dropped.

Arlan Suderman of StoneX thinks the report revealed no surprises. But, he says, it does possibly set the stage a volatile January report.

“I think the trade was hyped up for a bullish report, and December is just too early to do that,” says Suderman. “What that bullish report would take was significant reductions in South American production. They could probably justify it, but USDA historically doesn’t like to do it in December. It’s an early part of their summer in South America. And you really need a change in South American production to justify the bigger export numbers right now.”

The trade is watching dryness in South America, driven by La Nina. USDA adjusted production estimates for both corn and soybeans Argentina slightly lower but left Brazilian crop expectations unchanged.

“USDA lowered Argentina production, and I thought that was very much in line with what I was thinking,” says Darren Frye president and CEO of Water Street Solutions and Water Street Advisory. “I think there’s more cuts that come down there, especially if you see the weather forecast materialize.”

Frye says he was mostly surprised on USDA’s decision to not make adjustments to the corn crop in Brazil.

“First-crop corn has really been pared back, and I really expected them to come down from there 110 million metric ton mark, but they didn’t move that, and they left the beans unchanged,” he says. “That’s not surprising, just because with normal weather down there from here on out, they could still raise a pretty good bean crop. I think their corn numbers too high and we’ll have some adjustments lower in the future.”

Related Stories:

Corn, Soybean Prices Retreat as USDA’s Modest Cuts Disappoint