The Trade Faces True ‘March Madness,’ Analyst Says
March Madness is a term usually reserved for the college basketball tournament that starts this month, with teams whittled down from 64 to one champion through a series of tournaments.
It could just as well apply to agriculture but for a different reason. Flooding is the first part of the March madness that agriculture will need to endure in 2019. First in Nebraska, Iowa, and South Dakota last week and the northern states of North Dakota, Minnesota, Wisconsin, and Michigan the latter part of March.
Weather forecasts continue to push toward a wetter forecast the next two weeks, with about normal precip the next seven days, and above normal for the eight- to 14-day U.S. forecast.
Temperatures also are cooling, with mostly normal to below-normal temps forecast for most of the U.S. the coming two weeks. This is not as favorable as it was just last weekend. So planting may be delayed somewhat in the Corn Belt as we start the season.
Flooding will continue in northern states as the snowmelt continues. We were completely saturated last fall in almost the entire Midwest, so it is not a surprise with the heavy snowfall in Jan/Feb that we are suffering from spring flooding. We note that winter wheat conditions improved this week in the key states of Kansas (+3% Good/excellent), Oklahoma (+14%), and Texas (+6%). We’ll see how wheat can handle that bearish news.
Our March madness continues with the March 29 Prospective Plantings Report on Friday. For most crops acreage numbers are expected to show more corn, less soybeans, and more HRS wheat than last year. What the numbers actually are on Friday will begin the spring marketing season, with prices moving where they need to go to allocate crop acres and values.
Also this week, U.S. Treasury Secretary Mnuchin and Trade Representative Lighthizer and teams will travel to China to meet with Chief Chinese negotiator Liu in Beijing
Thursday and Friday. Next week, Liu will be back in Washington with his team trying to finish the negotiations (we hope). If successful, that might be the biggest boost to U.S. ag prospects this year – by far.
To put it into perspective, the U.S. has lost the equivalent of about 18 million acres of soybean export business with China the past year. That is the equivalent of a 10% increase in corn and soybean acreage this year in its impact on ending stocks. Or, it’s like having a 10% higher yield in both corn and soybeans on any given year. However, trade disputes aren’t like a one-year weather event – they keep on impacting markets year after year after year. The point is, a China-U.S. trade deal is a really, really big deal. Let’s hope it gets done.
South America’s weather is wet and cool in Brazil, and warmer and much drier in Argentina the next two weeks. That will allow nearly perfect harvest conditions in Argentina, with pretty much steady harvest progress likely to occur. The wet weather in Brazil will aid the second-crop corn (or safrina) crop. So weather is favorable for South America.
Ray can be reached at email@example.com.
Ray is president of Progressive Ag Marketing, Inc., a top-ranked marketing firm in the country.
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