The policy mainly vexes the U.S. textile industry, but exporters of farm goods also are wary. The Chinese have a history of turning away shipments when commodity prices get higher than they can stomach, like they did with South American soybeans this year.
That situation will bear watching, especially with Chinese demand on the rise and USDA calling for record harvests this fall.
The government pegged the soybean crop at 2.877 billion bushels, well below where the trade thought the forecast would land. The smaller crop projection, in turn, led to a downward revision in carryout from July's estimate of 210 million bushels to a now super-tight total of 190 million bushels. The market response Thursday was a limit-up surge in prices.
There was opposite news in the corn trade. USDA's forecast of a 10.923-billion bushel crop was well above the average trade guess ... and more than 800-million bushels above last year's record harvest. The massive crop pushed projected ending stocks higher, from the 991 million bushels predicted in July to 1.132 billion bushels in August. In the pits, the crop numbers pushed prices toward harvest-time lows.
Wheat numbers also were negative with total production placed at 2.1 billion bushels. That's up 3 percent from the July estimate.
The cotton report, too, was bearish with a predicted harvest totaling 20.2-million bales, up 11 percent from 2003.