By Doug Tenney, Leist Mercantile
Bloomberg News reported on Feb. 28 that the U.S. and China are in the final stages of negotiating a 150-page executive order, which may be ready to be signed by President Trump and President Xi yet this month. Final details are still being hammered out. The pact will include six “memorandum of understanding” points agreed to last month. Those six points are: forced technology transfer and cyber theft, intellectual property rights, services, currency, non-tariff barriers to trade, and agriculture.
Late last month, White House Economic Adviser Kudlow indicated the U.S. is on the verge of an historic pact with China. The weariness is readily apparent for all in the ag industry in regard to the months long U.S./China trade issues. Producers have paid with the decimating hit they took to their bottom line with the sharp decline in soybean prices since last June. With the huge amount of selling pressure in recent weeks, it appears traders are looking for specific things to occur, a date to be announced for the trade signing by the presidents, and the actual signing to happen.
Winter is still hanging on with claws outstretched. The first weekend of March saw a major cold pattern moving through the Midwest with another in the forecast for the second March weekend. Ohio had snow with that first weekend storm. It is also bringing rain into the U.S. Delta and Gulf States. This cold, wet pattern will prevent timely corn planting in the Delta.
The annual USDA Outlook Conference was held last month. Their projection of 2019 U.S. acres included, corn 92 million acres, soybeans 85 million acres, and wheat 47 million acres. Last year the U.S. planted 89.1 million acres of corn, 89.2 million acres to soybeans, and 47.8 million acres to wheat. Wheat acres for 2019 are the lowest in 110 years. The next monthly Supply and Demand Report will be on March 8. The yearly Prospective Plantings Report will be March 29.
With March now well underway it is most obvious that plenty of fieldwork needs to be completed before spring planting of corn and soybeans can get underway. Producers knew months ago the time for fieldwork was going to be a gargantuan struggle this spring. Ohio is not unique with field work delays rampant across the eastern Corn Belt. Last fall’s harvest was a slow and difficult one for producers across Ohio as well as the Midwest with many rain delays. Those that finished harvest by mid-December were not able to complete their normal fall tillage work. Others were only able to finish harvest after leaving severe ruts in fields. Those ruts have not been filled in this winter as desired. Soil compaction will be a major issue for years to come, affecting yields while bringing back bad memories along the way. The deluge of rainfall also left numerous producers with unharvested soybeans. That harvest disappointment across Ohio has been further compounded as nearly 10 inches of rain fell during January and February. It was wet across Ohio on March 1.
Old crop soybean basis has been weak for months and dimes wider than average at the start of March. Closer examination reveals new crop soybean basis levels have already seen widening take place. Numerous locations across Ohio have seen new crop soybean basis levels widen by a dime or more in January and February.
The 30- to 60-day weather forecasts suggest above normal precipitation across the Corn Belt. Expect planting delays, high frustration, and continued grain prices disappointment.