11/05/19 — It seems the market is focused on two items right now: The negotiations for the “Phase 1” trade agreement and the harvest. Harvest has not gone well in October, a month that typically is the bulk of harvest for U.S. crops.
This Monday, Nov. 4, we only had 52% of the U.S. corn crop harvested, the third slowest ever since reporting began and well behind the 75% normally harvested at this time. We have been focused lately on the soybean harvest, which is also only 75% complete vs. 87% normally done. It’s more important to harvest soybeans in areas that get snow, as it’s really hard to do a good job harvesting soybeans in 1-2” (or feet) of snow! We have been particularly blessed this fall with extremely cold and dry weather since early October (when a huge snowstorm hit northern areas). Since then, the snow has melted and while soils were waterlogged and full of water ponding, they have been freezing lately at night which allows farmers to go back and get more harvested in wet areas when the soil is frozen. It’s rare that it can stay this dry and cold so long, so it’s been a bit of a blessing after the horrible weather earlier this fall.
Corn ratings are still being done, with 58% rated G/E this 11/4/19 which was unchanged from last week, but still well below the 68% rating last year. Interestingly, the Pro Ag yield model, while down 0.3 bu/acre this week, still is relatively high at 173 bu/acre, only 1 bu/acre below trend. That seems a bit high to us at Pro Ag, and USDA is still at 168.4 bu/acre in October. But we do worry they may hike that somewhat in the November report.
Other crops are seeing better harvest progress, with cotton 53% harvested (2% ahead of normal), and sorghum 78% harvested (6% ahead). But some crops still lag badly like the corn and soybeans, with sugarbeets only 70% harvested (21% behind normal), sunflowers 31% harvested (31% behind). But winter wheat is 89% planted, 1% ahead of normal with 71% emerged (3% behind normal) so it seems the southern portion of the U.S. is faring a bit better this year than northern areas.
Weather forecasts continue mostly cold and dry for the next two weeks, with very little precip but very cold temps that actually might be somewhat favorable to harvest activity, especially in the soggy north where frozen ground is much better for harvesting than the mud. There was light rain in Indiana, Ohio, and Pennsylvania on Nov. 5, but it was fast moving and should not delay harvest long.
U.S. stock markets rallied to new highs yesterday in the Dow and S&P, with the U.S. stock markets soaring compared to the rest of the world. News came out late yesterday that the U.S. and China are considering rolling back existing tariffs as well as suspending new tariffs in their negotiations for the first phase.
That means negotiations are going very well as both sides are finding common ground (finally) in trading with each other — which of course benefits both economies. But with China selling us three times more than we buy from them, it does benefit China more (as the U.S. has contended all along). It appears China agrees with the U.S., and now the US is considering removing the 15% tariff on the $111 billion in product imports the U.S. imposed on Sept. 1. For those of you good at math, that amounts to $16.65 billion in savings for the Chinese — enough to buy and pay for 1.6 billion bushels of soybeans (their max historical purchase) per year!
The U.S. will be hosting the signing ceremony of the event if the two sides can come to an agreement, but it’s currently uncertain if that will be Nov. 17 — the same time that was scheduled before in Chile before they cancelled due to their internal unrest.
So harvest of U.S. crop and the U.S. trade agreement (or no agreement) with China is the big story for ag in the coming two weeks, along with a USDA Nov. report this Friday, Nov 8. But as the curtain continues to be peeled back on the future of ag, it continues to look brighter as brighter as 2019 moves forward.