Weather market continues
Planting progress came in as expected for corn at 49 percent complete. Nearly 30 percent behind the 5-year average of 80 percent.
Several of the larger corn production states are almost 60 percent behind, such as Illinois, Indiana, Ohio and Michigan. Iowa, Minnesota and Nebraska made big gains last week of 25-35 percent. At 49 percent complete, this is the slowest corn planting progress on record.
Soybean planting progress improved 10 percent to 19 percent complete. This was 3 percent less than expected and is 28 percent behind the 5-year average. Nearly all of the key soybean growing areas are lagging by 20 percent behind the 5-year average. Forecasts for farmers to catch up this week do not look promising as we approach prevent plant dates in one to two weeks for corn in many areas.
The USDA announced details of the new farmer support package due to ongoing trade issues. President Trump has authorized the USDA to provide $16 billion in programs for unjustified retaliatory tariffs on U.S. agricultural goods and other trade disruptions from China, Turkey and the EU.
Of the total, $14.5 billion will be made in direct payments to producers, $1.4 billion will be used to purchase surplus commodities for redistribution and $100 million to be used to assist in developing new export markets on behalf of producers. Payments will be assigned to each county and be based on historical production. Regardless of the eligible crop grown, each grower in a county will receive the same rate. Payments are going to be based on reported planted acres for 2019 but can’t exceed 2018 plantings. The USDA hasn’t announced payment rates yet.
The movement towards ratification of the U.S./Mexico/Canada agreement took a step forward this week when both Canada and Mexico removed retaliatory tariffs. This happened after President Trump lifted tariffs on steel and aluminum. Even with the optimistic movements forward, Congress must approve the deal, which could face some challenges due to concerns of lawmakers on provisions in the agreement. Directors of Agriculture in Missouri, Iowa and Nebraska are pushing Congress to ratify the agreement, stating in an article that the USMCA would give U.S. farmers a fair and level playing field for trade with Canada and Mexico.
U.S. Treasury Secretary Steven Mnuchin stated on Wednesday that it would be at least 30 to 45 days before the U.S. would enact proposed tariffs of $300 billion in Chinese imports. Earlier this month after the 10-month trade war talks stalled, Washington raised tariffs on $200 billion in Chinese goods from 10 percent to 25 percent.
This lead China to retaliate with levies on U.S. imports. The 30-day window would be accelerated compared to how quickly previous tariffs came into play and would also mean that the next round of tariffs would be ready when President Trump and China’s president are set to meet at the G20 summit in June. Mnuchin said the Trump administration is open to new talks with China if both sides can continue on the previous negotiations.
At the end of June, the USDA will release their revised acreage estimates. Looking back, the largest acreage declines between the March and June reports has been 3.3 million acres. This was recorded in 1995. Acres also decreased from the June to final report, accounting for a total reduction of 4.1 million acres from the March intentions. That year, planting progress at the end of May was recorded at the slowest pace on record, until this year.
For more information, you may contact Kristi Guse at (712)-260-6486, or e-mail at email@example.com. The opinions and views expressed in this commentary are solely those of Kristi Guse. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.
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