Early Corn Planting and Ag Group Meets to Discuss Trade - Friday, 17 March 2017

Corn prices have now lost all of their gains from 2017 and are now near price levels from the end of 2016.  A couple of main bearish points have been the principle drivers behind this setback.  First is the impressive recovery in the 2017 South American crop which is now estimated to be +30 MMT’s larger than a year ago.  The USDA raised their expectations for the Argentine corn crop from 36.5 to 37.5 MMT’s and Brazil’s from 86.5 to 91.5 MMT’s which all adds up more corn available for exports. The weather has also been a negative factor influencing corn prices since in some areas of the U.S. the weather is cooperating and allowing for early fieldwork in those regions. It’s hard to believe while we have snow on the ground here that corn is already beginning to emerge in the Deep South and early planting dates come into effect this week for Oklahoma, southern Missouri and southeastern Kansas. The lack of weather issues has prompted Informa to raise their corn acre forecast a bit from 90.5 to 90.8 million acres and many in the trade also believe that the USDA will be increasing their corn acres as well. The reappearance of the Bird Flu and an increase in value of the U.S. Dollar are also adding to negativity in the marketplace.

 

There are signs that the large increase in soybean acres that has been predicted for several months now may not be occurring in southern U.S. after all.  There have been several reports out of the South part of the country that corn acres that were expected to shift to soybeans are actually being planted to cotton.  The record setting soybean crop in South America, the expected increase in U.S. soybean acres, exports reduced by -25 million bushels and an possible pullback in Chinese demand growth have all have weighted the soybean market down dropping prices by -$.30 this past week and -$.80 from January highs.  

 

A news release from Ag Web on Thursday, March 16th, 2017 stated that leaders from 11 major U.S. Ag related organizations are praising the Trump administration for the highly productive meeting held that focused on the “importance of continued growth of food and agriculture exports.”  They reminded the President’s administrative team that the U.S. Ag sector supports more than 15 million jobs and generates over $423 billion in economic activity and is the largest manufacturing sector representing 12% of all manufacturing jobs in the country. These organizations began the process with a series of written communications where they stressed the importance of agriculture trade.  The group has several goals that they hope to achieve, one of them being preserving the major benefits of the North American Free Trade Agreement.  They also hope to strengthen trade discussions with vital U.S. trading partners in the Asia-Pacific region.  “It is clear from this meeting and other interactions that the Trump administration understands and intends to pursue expansion of U.S. food and agriculture exports which contribute to U.S. manufacturing, job creation and economic growth,” the groups said following the meeting.  “We are committed to offering substantive proposals and ideas, and look forward to further opportunities to work with the administration and its trade team as they develop specific strategies for engaging in trade negotiations with our most important trading partners.  We are pleased that we received assurances from the Trump team that it will take us up on that offer.”

President Trump’s “America First” 1.1 trillion budget has been made public.  There are proposed cuts to the EPA and State Department as well as others including the USDA.  At this time the President’s plan calls for an $18 billion cut in agriculture or a 21% reduction from the 2017 budget. Proposed reductions would include a mix of spending cuts and reductions in staff including some jobs at Farm Service Agencies and local USDA offices.  Spending on Food Stamps and Crop Subsidies are not listed in the reductions.  Many leaders in Washington are stressing the importance of getting leadership in place at the USDA especially now that budgets are starting to be negotiated.  It’s now reported that Sonny Perdue’s paperwork has progressed to the Senate Agriculture Committee and is now scheduled for a hearing on March 23rd.

The National Weather Service outlook for today through Tuesday calls for the likelihood of above normal temperatures and normal precipitation for our region.  The end of next week looks to be wet with showers expected Wednesday, Thursday and Friday.

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