Alex Norton / Beeson Inc.
A variety of drivers have been in the market's collective conscious that are pushing and pulling prices, this week. Weather has been disruptive to harvest progress in the U.S. and Canada for the last few weeks. Rain and snow (in more northern areas) are limiting farmers' ability to get in fields and get crops out. In parts of Illinois, standing water in fields will be an issue into next week while snow in parts of the Canadian Prairies are holding canola and pulses hostage.
The last couple of weeks have seen some news out of Russia that have resulted in dramatic price swings. To catch up, a few Fridays ago rumors begin to circulate that the Russian Agriculture Ministry intended to curb wheat export demand by placing limits on shipments once exporters hit 30 million metric tons of exports. This hit the news not by an official announcement from the Russian government, but from a word-of-mouth exchange with one of the exporters allegedly present during a discussion about this potential policy.
The annual tour put on by ProFarmer sends scouts all over the Corn Belt. The objective is to gather samples all over the top producing corn and soybean states to give a "boots on the ground" look at these crops and provide a yield outlook for the fall.
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.