It takes two to tangle in a trade war; premiums on food grade soya, corn trying to climb

By Eric Wenberg

The week started on a grim note with the Trump administration threat over the weekend to raise more tariffs against China as negotiations between the two countries were approaching what may be a final round this week. A Chinese delegation is set to arrive in Washington D.C. on Wednesday. The news reacted to story of the President’s tweets over the weekend, threatening China with the higher tariffs. Reports are this issue didn’t just jump on the President’s smart phone by itself. In meetings with top U.S. trade officials last week, China began walking back on firm promises made at the table. This is a fluid situation, and it’s important to keep in mind that trade negotiations always look worst right before they finish. Meanwhile, as the news rocked back and forth, farmers, brokers, and shippers, are feeling the whiplash and soybean futures prices are going up and down this week on the news.

As U.S. farmers are planting and contracting ahead for stability, there is plenty of weather to bring volatility to the market in contracts without unresolved trade negotiations. The USDA Agricultural Marketing Service (AMS) Market News report on May 3 regarding prices and premiums for conventional, non-GM soya and corn showed July basis price contracts had climbed up some from last year’s July drop. While prices are not where anyone wants, the present levels will keep the U.S. competitive in food grade soya and corn in export markets against other high-quality exporters. Brokers are noting that premiums might fetch from $70-100 per acre more on these crops in some regions. Yes, yields and quality might be a bit off other crops, but that’s a worthwhile return on investment for a farm of conventional food-grade field crops. In the May 3 report, USDA noted that compared to its report last week, demand is very good with moderate trade. Grower bids for corn and soybeans were steady. According to the National Agricultural Statistics Service (NASS) Crop Progress Report of April 29, corn planted was 15 percent, the same percentage planted for the same time last year. Soybeans planted was 3 percent versus 5 percent for the same time last year.

Click here to read the May 3, 2019 Agricultural Marketing Service Market News report for non-GMO/GE grain.