For the past three weeks, the market has been soaking in the glory of a functioning U.S. Department of Agriculture. For many producers across the U.S., one of the biggest things was the ability to apply for aid as a result of the trade war's negative impact on returns. The extension to mid-February allowed for applications to be submitted beyond the initial deadline. For all market participants, the USDA's regular reporting of critical market data was particularly appreciated after over a month of silence. This gave traders, buyers, and producers alike the ability to track export progress (with reports still catching up), get a glimpse of the outlook for the 2018/19 crop year balance sheets and ending stocks, as well as the final numbers for winter wheat planted area and the size of the fall crops produced in 2018.
All of this data was discussed last week, but the funding of the government was only set for three weeks to allow for lawmakers to negotiate border security and come away with a plan that would actually set the budget for the year. Leaving out the political side of this story (as there has been plenty of coverage over the last few days and personal opinions on the move vary), the agreement was passed by both houses and signed into law by the president. Thankfully, this will ensure the ongoing support of and necessary market data from the USDA.
The next round of negotiations will also be critical, with the U.S. and China trying to reach a trade agreement. Chinese officials have stated that an extension on the initial 90-day window is not in the cards, which leaves less than two weeks for the governments of the two biggest economies in the world to iron out a deal that would keep tariffs from climbing to 25 percent on many Chinese goods (and assumed retaliation by the Chinese on U.S. goods and products). As of the end of the week, the two sides remain far from making a deal.
Wheat markets took a big hit this week, with the new crop Kansas City and Chicago futures contract falling to new lows. The Minneapolis spring wheat market did not fall quite as much, but still saw some pressure late in the week. On top of the looming China and U.S. trade deal deadline, prices found pressure from weak U.S. export data. As was previously mentioned, the USDA has been trying to catch up on export sales data that was not reported through the shutdown. This week's report showed disappointing sales, which pushed markets considerably lower.
Durum prices have not been seeing much movement and the market is not interested in much until new crop weather and plantings are closer.
The canola market has been under pressure for the last three weeks. Prices have not been able to sustain previous strength as an oversupply of soybeans and palm oil is resulting in a more bearish market sentiment.
There has not been much movement in the mustard seed market. Production in the U.S. and Canada was higher than the previous year by a large margin. Demand has been good, so even though stocks have increased, the market has not seen as much pressure as one would initially assume from just looking at output.
Barley prices have been under major pressure in recent weeks. Demand has fallen off from key buyers in China and Saudi Arabia. Even with generally low global barley supplies, price pressure could continue. According to analyst group Strategie Grains, the poor crops in the European Union and Australia last year took stocks down to their lowest levels in 35 years, yet the lack of demand and prospects for a good global crop in 2019 are resulting in prices falling into the spring.