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Close only counts with horseshoes and hand grenades, but could the U.S. be approaching some resolution for trade disputes? It appears that the North American Free Trade Agreement could be resolved with the U.S. reaching a deal. And at the end of the month, the U.S. and China are set to sit down and discuss some issues. Wheat
Some critical data was released by the U.S. Department of Agriculture this week. There is a lot to digest in each World Agricultural Supply and Demand Estimates (WASDE) Report from the USDA, but August is especially important as it gives a first look from the government on expectations for spring crop yields. The market's key focus is always the corn and soybean yield estimates, though other crop categories are obviously important.
During this time of year, the agriculture markets usually are focused on a few key drivers. Weather in the Corn Belt and Plains is the main piece. Results of harvest of the U.S. winter wheat crop is another. But this summer has seen an emphasis placed on other key factors.
Each month, the U.S. Department of Agriculture releases updated supply and demand estimates for major crops. The crops in the U.S. are often the primary focus of the report, with the market's reaction tracking with the domestic story.
Both Statistics Canada and the U.S. Department of Agriculture released major reports on June 29. Planted acreage for the 2018 crops as well as U.S. quarterly grain stocks have been the market's focus all week. Individually, there is a lot of information to shape the supply and demand fundamentals for each crop. However, the overall tone of the reports show that estimates ahead of release were generally pretty close to the actual data. As a result, the market was quick to shift focus back to weather and expected output this fall. Wheat
Spring and early summer are traditionally volatile times for grains. Weather forecasts can swing markets wildly, and buyers and sellers alike are thinking about eventual production of crops. Throw in this year's wild global trade relationships led by the U.S. tariffs, and that makes for some wild swings (even in a generally well-supplied old crop situation).
The Trump Administration announced that the exception would be lifted for previously-announced tariffs on steel and aluminum imports from Mexico, Canada and the European Union. This move hits hard for some of the U.S.'s top trade partners. Canada was the No. 1 importer of U.S. agricultural and related products in 2017, bringing in over $24 billion. Mexico was No. 3, behind China, buying $19 billion of agricultural goods. While the European Union is a smaller buyer of U.S. agricultural goods, many countries are strategic allies that will be impacted by this move.
The U.S. House of Representatives is set to vote on the farm bill, but a variety of issues are derailing the bill's primary focus: farming. The first is the work requirements that may be added to Supplemental Nutrition Assistance Program, or SNAP, participants. Some find the requirements to be too harsh while others think it will help many get back to work. Another issue is immigration. Members of the House Freedom Caucus are threatening to back off support of the farm bill unless they receive support on their immigration reform efforts.
Each year at the start of May, a large group of volunteer crop scouts tour the state of Kansas to sample wheat fields and get a firsthand look at the winter wheat crop. The Wheat Quality Council's Hard Red Winter Wheat Crop Tour allows the market to preview the primary winter wheat growing state ahead of the May U.S. Department of Agriculture estimates for the new crop.
The Northern Plains and parts of the Corn Belt are unseasonably cold. Some major snowstorms were reported through the week which makes any planting difficult. Even in areas not hit by snow, cold soil temperatures prohibit planting. The U.S. Department of Agriculture's weekly reports confirmed these planting delays — spring wheat efforts are basically halted and corn progress was basically unchanged from the previous week at just 3 percent completion.