SAN ANTONIO — Leaders of the nation’s top commodity organizations were focused on trade, biofuels and the upcoming crop season at this year’s Commodity Classic in San Antonio.
United States soybean producers had to most to gain from the phase one deal with China, but purchases have been nearly non-existent since the Feb. 15 implementation amid the emergence of coronavirus. American Soybean Association President Bill Gordon says they’re not ruling out the possibility China could use the event as an excuse not to fulfill their first-year commitment of $36.5 billion under the agreement. He says they are still hopeful for Chinese soybean exports, but the key is the agreement says China will buy based on “market conditions.”
The sorghum industry is one of the few sectors that has seen some China purchases and was pleased with more than 444,000 metric tons of sorghum sales to China and unknown destinations on the weekly export report on Feb. 27. National Sorghum Growers Association CEO Tim Lust says they are taking that as a positive sign as it has been several years since China purchased that kind of volume.
“Certainly, we’ll see over the next few weeks and the next month or so hopefully we’ll some more of those market signals. We’re excited to see China back in the market," he says.
“Shipping is just so important to us, and our ag products have to move outside the country and across the world, and anytime you have a disruption like this in the marketplace, kind of black swan event, you know it has an impact,” he says.
U.S. Agriculture Secretary Sonny Perdue told farmers at Commodity Classic that the agency is not working on a third round of Market Facilitation Program payments and advises farmers to plant for the market. He says he’s advised President Donald Trump that the MFP payments were only a trade-damage mechanism, not a price support program.
Gordon says his organization wants trade, not another MFP and any payment tied to production would only increase acreage in 2020.
“We don’t want anything tied to production,” he says.
Perdue says the administration believes that prices will rise as commodities start to flow to China again, but possibly not until after coronavirus is under control.
The various trade wins beyond China, such as the bilateral with Japan and the U.S.-Mexico-Canada Agreement, also set up an optimistic outlook on demand. Ross says he thinks more of it will be back loaded in the later half of the year as currently there is pressure from South American corn and soybean crops. Gordon says USMCA wasn’t as important as the China deal but really set the template for phase one as well as other bilaterals around the world.
Biofuels outlook improves
2019 was a tough year for the biofuels industry, but NCGA’s leader is optimistic the recent ruling in the 10th Circuit Court of Appeals will force the Environmental Protection Agency to change their methodology on how they grant small refinery exemptions.
“In general, the 10th Circuit case was a big win for us and hopefully it showed exactly what we’re talking about that the waivers that they were giving were not legal first of all and that judgement will transfer to the way they administer the rest of these going forward,” Ross says
They are hopeful those lost gallons will be made up going forward. They have been assured that the 15-billion-gallon mandate under the Renewable Fuels Standard will be met, and they will fight to get it in the final RFS language for 2020.
Movement needed on infrastructure, immigration
“It has been a long time since we have done any sort of significant investment in our infrastructure, and so the House is already starting to pull a bill together and splitting it into three smaller bills,” Goule says.
He says that might make it easier to get it passed but realizes an it may still be a tough lift. Goule admits an immigration bill is also a hot potato in an election year, but he says Congress can’t even move a bill during the slow times.
“I think we need to work just on ag immigration because we are the silent losers in this by not being able to have a legal workforce to help us harvest that safe food crop,” he says.