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Markets react with ‘positive spin’ over recent trade news

By Staff | Dec 7, 2018



There’s been a flurry of activity in Washington, D.C., that impacts agriculture, but not everyone is happy with the results.

President Donald Trump on Tuesday told reporters that there could be an extension of the 90-day trade truce he and Chinese President Xi Jinping agreed to at the G20 summit over the weekend that would freeze tariffs while a broader deal is negotiated.

Trump’s economic advisor, Larry Kudlow, addressed reporters Monday, noting that the 90-day negotiations timetable began Dec. 1.

U.S. Sen. Charles Grassley, R-Iowa, said he’s pleased that the updated trilateral trade agreement shows that America “stands ready to do business and negotiate trade agreements that create mutual economic prosperity while leveling the playing field to correct trade discrepancies that hurt U.S. interests.”

The federal Environmental Protection Agency also announced that it has finalized the required renewable fuel volumes under the Renewable Fuel Standard (RFS) for 2019.

“Issuing the annual renewable volume obligations rule on time is extremely important to all stakeholders impacted by the Renewable Fuel Standard program,” Acting EPA Administrator Andrew Wheeler said. “Unlike the previous administration, the Trump administration has consistently met the deadline on time and fulfilled our commitment to provide stability to the program and greater certainty to farming and refining communities across the country.”

“Conventional” renewable fuel volumes, primarily fulfilled by corn ethanol, will be maintained at the original 15 billion gallon target set by Congress for 2019. Advanced biofuel volumes for 2019 will increase by 630 million gallons from the 2018 standard. Cellulosic biofuel volumes also will increase for 2019 by almost 130 million gallons from the 2018 standard.

Donnell Rehagen, chief executive officer of the National Biodiesel Board, was less than thrilled with the “underwhelming standards” for biodiesel.

“EPA recognizes that the biodiesel and renewable diesel industry is producing fuel well above the annual volumes,” Rehagen said in a statement. “The industry regularly fills 90 percent of the annual advanced biofuel requirement.”

Grassley also weighed in on the RFS, noting that biofuels blending levels for 2019 are “good news for farmers, biofuels producers and all Americans.”

“The increased levels are an encouraging development after a year of underwhelming and often disappointing news from EPA,” Grassley said. “These levels are a promise made by EPA in line with congressional intent and the spirit of the Renewable Fuel Standard law. The true test of this promise is with the implementation of the program and how many gallons of biofuels are actually blended.”

The farm bill also is pushing its way through Congress, with support expressed Monday by U.S. Agriculture Secretary Sonny Perdue as he spoke with reporters in Chicago.

He recommended that the president sign the new farm bill even though it doesn’t tighten work requirements for the Supplemental Nutrition Assistance Program. The House and Senate agriculture committees have yet to release any details about the agreement.

“I will advocate that he sign the bill even in light of the fact that we were not able to achieve all that he wanted and I wanted in the work requirements,” Perdue stated.

So how did the markets respond to all of this news?

Chad Hart, agriculture economist at Iowa State University, said the markets did appear to react to the trade news with China, which put out a “positive spin.”

“Looking at the farm bill, the markets don’t really care about that and when talking RFS, that announcement was expected, so there wasn’t a big market impact from that,” he said. “Right now, the markets are looking at the government policy, specifically trade policy.”

Iowa Corn Growers Association President Curt Mether, who farms near Logan, said as a producer, there’s “another issue every week or every other day out of D.C. We just deal with them as they come.”

“It sounds like progress on the farm bill is going pretty good and it would sure be a relief to get that done and put behind us,” Mether said. “It sounds pretty good, but it’s like harvest – you never know until it’s over. But we really need the trade talks to come out positive for all producers.”

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