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2020 Starts With Optimism, Analyst Says

In agriculture, there is a lot to look forward to this year.

2020 starts on a very optimistic note for agriculture.

The soybean market may have the most positive outlook going forward, as the Chinese Trade agreement “Phase 1” is pretty much everything agriculture needs. Things are very likely to get better in 2020 for agriculture, and that momentum will probably build over the next few years. Let us hope 2020 brings fruition of higher prices to all this optimism!
 
In specific developments the past week, South America’s crop weather is turning back to warm/dry in Argentina the next seven days, and more normal temps and precip in Brazil (similar to much of the season thus far). However, the eight- to 14-day forecast brings back more normal precip to Argentina. So that will ease any concerns about Argentine weather. Overall, much of SAM has seen relatively favorable weather thus far. We are just now arriving at the most critical juncture of SAM production, with crops just starting to enter the reproductive stage of production (similar to July 1 period in the U.S.). So, the weather the next two months will be the most important weather period of the year for most South American production regions.   

Meanwhile, a major U.S. winter storm once again arrived in the center of the Midwest over the weekend, dumping up to 2 feet of snow in some areas and 1 foot or more in much of the northern Midwest.  Snow ended Tuesday in the eastern Corn Belt states of Wisconsin, Michigan, Illinois, Indiana, and Ohio, as it moves eastward and diminishes. There is still a lot of corn left in these northern states to harvest, and this snow isn’t going to make it any easier.  

It has been a mostly warm winter thus far in the U.S., with temps averaging much above normal for much of December. In fact, Iowa has probably seen more rain than snow in December 2019, a very unusual situation for them indeed. But forecasts are to turn much colder now to start January, and that might end our nice run of warm weather in much of the central U.S.

2019 In-Review

This past year, 2019, was another difficult year for many in agriculture, as the Chinese-U.S. trade feud continued and left U.S. commodity prices at the bottom of the historic price range all year. That provided much difficulty for U.S. soybean, corn, and wheat producers especially as our 25-million-acre Chinese customer turned into a 10-million-acre customer.  

Fortunately, we lost about 12 million acres more than usual to prevent planting this year, and that along with below-trend yields in corn and soybeans helped us to eliminate at least some of the buildup of stocks from our 1.5-year-long trade dispute.  

However, as we ended the year, a lot of positive things developed for agriculture the past month that are likely to lead to a much better 2020 than the past five or six years: 1) A China trade deal, 2) USMCA trade deal with Canada and Mexico, 3) trade deal with Japan progressing, 4) potential for a UK trade deal after their vote, 5) a below-trend yield on 12 million less planted acres of corn and soybeans in 2019, and 6) a U.S. election in 2020 that usually brings prosperity to agriculture.  

To start 2020, a new decade, here’s wishing all a Happy New Year, and let us hope that all the optimism for agriculture in 2020 will come to fruition. God knows our industry sure needs it after the last six
difficult years!  


Ray can be reached at raygrabanski@progressiveag.com.  
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Ray is President of Progressive Ag Marketing, Inc., a top Ranked marketing firm in the country. 

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