By MICHELE F. MIHALJEVICH

Indiana Correspondent

WASHINGTON, D.C. — Reaction to a report on China’s soybean supply has been mixed among some market analysts in the United States.

China has enough soybean stocks to last until February 2019, AgriCensus said, quoting China-based market sources. If accurate, the country would no longer need to purchase U.S. soybeans, the report noted.

China has purchased more than 85 percent of Brazil’s soybean exports and is now counting on Argentina – despite a drought – to pick up the slack, AgriCensus stated. China is also working on establishing trade with countries such as Ukraine and Russia, another Chinese official said.

AgriCensus is a price reporting agency providing market moving news and benchmark prices for the bulk agriculture markets, according to its website.

The USDA stated in early October U.S. exports to China were 85 percent below last season. The lower sales were primarily due to China’s decision to include soybeans on the list of U.S. commodities subject to retaliatory tariffs, the agency added.

Matt Connelly, analyst with The Hightower Report, believes the Chinese report to be accurate. “They’ve been auctioning soybean reserves since the summer,” he said. “They’ve sold about 2 million metric tons to Chinese crushers in the last few months. The speculation is they may ramp up those sales. That would cushion the blow.”

There’s also been talk of China lowering protein levels in meal rations, he said. African swine flu has also been an issue there. “It means they don’t need as many beans. Chinese total imports could be 86 to 87 million metric tons instead of 94 million. That’s pretty significant.”

Todd Hultman, DTN market analyst, doubts China has enough soybeans to last until February. “They have storage facilities for about a month,” he explained. “They need to import 8 million metric tons of beans every month. It’s not likely they have enough beans to last that long.

“Will China be able to restrict consumption needs in order to skate by with minimal U.S. beans? That appears to be their plan.”

Once Brazil runs out of soybeans, the U.S. will be the only supplier available to them, Hultman pointed out.

China enacted a 25 percent tariff on U.S. soybeans in July. U.S. imports in July and August were higher than a year ago, as purchases were made by such countries as Egypt and Iran that the United States normally doesn’t do business with, he said.

Chinese officials are “determined to shoot themselves in the foot,” said Jon Cavanaugh, a private analyst and former marketing director for Central States Enterprises.

“To punish the United States, they’re punishing themselves in the meantime. They claim they do have enough storage, but that’s arguable,” he explained.

A Chinese reduction of soybeans in some feed rations could save on soy meal but could also make those rations less efficient, he said. Feed rations generally contain about 20 percent soy meal.

“China has been increasing their imports of soybeans,” Cavanaugh said. “There’s more and more demand for meat. They can’t get all their soybeans from South America; there aren’t enough beans there. Argentina has been sending more soybean meal to China, but their supplies are limited.”

Shawn Hackett, president of Hackett Financial Advisors, Inc., said U.S. analysts can only speculate about what is going on in China. “They’re cleaning out everything they can from other countries,” he said. “But not buying directly from us doesn’t mean they’re not buying our beans. The reality is their demand continues to grow.”

A trade agreement between the United States and China could lead to an increase in soybean prices of $1.50-$2 a bushel, Hackett said. Farmers considering planting more corn next year in light of large ending stocks for soybeans and smaller export numbers should reconsider, he suggested.

“Everyone wants to plant more corn,” he said. “It’s very attractive. I’m a believer in wanting to plant whatever everyone else is not planting. Less soybeans and a trade deal could mean $10 beans. I’d be planting more soybeans.”

Hultman’s advice to farmers is to continue as they have been. “I would not change (planting plans),” he said. “Take care of your land and do your normal rotation. You don’t want to end up with years of corn on corn-on-corn.

“As bad as it looks right now, we don’t know when or if the trade situation will turn around. I could see a benefit of about $1.20 a bushel in (soybean) prices once that happens.”