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S Illinois | The river does give midwestern grain a chance at being price competitive. Unfortunately that only gains the US producer in a portion of the grain transportation cost. Its gains the US producer price competitiveness against the Brazilian producer who have to rely more on trucks to reach the ports.
Brazil however has 2 larger price advantages. US grain right off the bat starts in a 30 cent hole as ocean freight is just that much cheaper to ship from Brazil to China when compared to NOLA. There is no way around that as geography determined that. The other issue is someone has to take on the storage role of excess supply. The US is better setup to earn the carry/storage that a market offers. That is Brazil grain system is more likely to sell beans cheaper than the US just because as currently structured the Brazilian farmer and even the Brazilian elevator system doesn't like to store beans. So they are more likely to set their prices at grain moving prices. This is where cost of production comes into play and what each countries respective grower is willing to sell grain at. | |
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China deal.
