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Iran was Top U.S. Soybean Buyer in August

Agfax reports Iran was Top U.S. Soybean Buyer in August

Thanks to Friday’s data from the U.S. Census Bureau, we now know that U.S. soybean exports were up again in August, to 123.7 mb in 2018 from 109.9 mb a year ago. If you thought it was odd that Egypt was the number one buyer of soybeans in July, you might want to sit down. The top buyer of U.S. soybeans in August 2018 was Iran.

Yes, the same Iran that President Donald Trump tweeted to in July in all caps, “NEVER, EVER THREATEN THE UNITED STATES AGAIN OR…” The same Iran that was hit with U.S. sanctions on August 6 and faces more in November. The same Iran that hadn’t imported soybeans from the U.S. all year until July. That same Iran stepped up in August and took 15.2 mb of U.S. soybeans, more than it has imported from the U.S. in the past five years combined. What gives?

When July’s data was revealed a month ago, many of us wondered if some of the increased exports were finding alternative routes to China. When I asked people who might know, the general consensus was that some U.S. soybeans may have found their way to China via Canada, and some exported to Argentina will end up in China, but a credible source explained to me that it would be difficult to fake shipping certificates that document the origin of where the soybeans came from.

I am no expert in forging certificates, but knowing a little something about human nature, we have to acknowledge the rich incentive to avoid a $2.18 a bushel tariff on U.S. soybeans with an FOB price of $8.72 in New Orleans. Which brings us back to the question, what gives with Iran?

China is a buyer of roughly one-fourth of Iran’s crude oil and is not interested in complying with the U.S. sanctions. Is it possible Iran is sweetening the pot for China to keep buying oil by also throwing U.S. soybeans in the deal? Yes, it sounds crazy, and not even Jack Ryan can prove this one, but is that the explanation for Iran’s sudden appetite for U.S. soybeans?

Again, I am not interested in spreading rumors — the world has enough of those and, as I said earlier, the evidence is lacking. But, as far as U.S. soybean demand is concerned, I must point out for the second month in a row that the market has found ways to make up for the loss of China’s direct participation.

No Conspiracy Theory Needed

The Financial Times reports US Farmers Turn to Iran to Plug Hole in Soyabean Sales.

Here's my favorite line:

We buy our commodity from a cheaper producer, no matter if it's the US or another country. It has nothing to do to politics,” said Akbar Sebghati, secretary of the Iranian Oilseed Extraction Industry Association.

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That one line tell you most of what you need to know.

Here's the rest: Soybeans are exempt from Trump sanctions on Iran for "humanitarian" reasons. So, off they go.

Excuse me, did I say "humanitarian"? Why, yes I did, but it's not what I meant.

Trump does not give a rat's ass about humanitarian causes. If it was primarily Germany that wanted to aid Iran on the same excuse, the answer would have been "no".

How do we know this? Look at US embargoes and sanctions on Venezuela. Look at US policy in Yemen.

Trump is worried about a farm-led revolt, no more, no less.

Iran the Beneficiary

Ironically, at least in terms of soybeans, Iran is the big winner, US farmers are the big loser. Prices are down because Iran cannot cover for all of the loss in exports to China.

Iran gets soybeans on the cheap and US farmers lose.

Well done Mr. President, Not

Meanwhile, please consider the Tariff Scorecard: 57 Companies Bitch About Trump's Tariffs, 7 Give Positive View.

Mike "Mish" Shedlock