Alex Norton, Beeson Inc.
It definitely took a while. The market had been trending lower for weeks. Pressure had come from the ongoing and intensifying trade war between the U.S. and China, as well as diplomatic tension between Canada and China. On top of that, huge supplies of grain and oilseeds domestically and abroad had kept pressure on. Speculative funds were holding incredibly large short positions for corn, wheat, and soybeans.
The trade deal with China was just around the corner. It was close. It was going to happen in just a few weeks. These were some of the lines that kept being repeated throughout the spring that kicked the can further down the road. Markets had generally lost focus on the ongoing trade negotiations as spring weather and planting of crops stole attention. The thought was that negotiations would continue, but an end was coming somewhat soon, and little excitement would come as the two sides came together.
Each year, scouts across the agricultural industry tour the state of Kansas for a look at their hard red winter wheat crop. The Wheat Quality Council has been conducting this crop tour for decades and interest continues to grow. More than 75 scouts, ranging from farmers, traders, reporters and more, took to the fields to take samples and get a feel for the 2019-20 winter crop. And what a good looking crop it was!
China Vice Premier Liu He was in Washington this week to meet with President Donald Trump and continue negotiations on trade. No deal has been reached, but both sides seem optimistic that an agreement can be reached. The timetable remains unclear, with four or five weeks as a possible window to solidify a deal. It appears that intellectual property theft continues to be a sticking point in negotiations.
Friday was a big day. Friday, March 29, held two of the most watched, anticipated, and important reports that the U.S. Department of Agriculture release every year.
There was a lot of build up to the March 1 deadline for a trade deal between the U.S. and China, but the proverbial can was kicked down the road and tariffs have not been increased. It appears that some progress was made with China pledging to buy 10 million metric tons of U.S. soybeans, and reports were generally positive coming out of meetings. The two sides continue to struggle to address intellectual property and theft issues, so no deal has been reached.
To qualify and not to offend any producers, U.S. wheat is too expensive to be competitive for exports. The entire 2018-19 crop year has been plagued by this issue.
The Northern Hemisphere is in wait-and-see mode on a lot of fronts. Weather is not much of a factor unless there is a bad storm or winter kill for the winter wheat crops. Export demand is tough to track with no information from the U.S. government. Stocks data and monthly supply and demand estimates from the U.S. Department of Agriculture are also missed. So the winter gives an opportunity to check with South America's growing season ... and Brazil is having issues.
Every year, the U.S. Department of Agriculture holds some very important data for the market in the January report. Not only is the World Agriculture Supply and Demand Estimates Report released, but also the winter wheat planted area data along with the Quarterly Grain Stocks Report. All of these hold key data for price discovery. But with the USDA currently shut down, the data will likely not be released on schedule. These reports are all to come out on Friday, Jan. 11.
For those readers who have been living under rocks, in caves, or have suddenly forgotten how to read and hear, presidents Donald Trump and Xi Jinping of the U.S. and China, respectively, met last weekend on the sidelines of the G-20 summit in Buenos Aires, Argentina.