Good Morning,
We saw some strength in the markets yesterday and are taking some of those gains back today. Yesterday’s rally appears to be the same old “buy the rumor, sell the fact” trading. Rumors that China may buy corn and soybeans as part of a deal with the US. So far these are only comments and have not been backed with actual purchases. Also aiding yesterday’s rally were comments from President Trump that he is open to extending a March 1 deadline to raise tariffs on Chinese products if the two sides are near an agreement. These comments are the strongest indication yet that he is willing to give Beijing more time to firm up a deal to head off the White House’s threat to more than double the rate of tariffs on $200 billion in Chinese imports. By extending the deadline, he could be paving the way for a potential meeting with President Xi to close the deal.
The Ag markets need to get this situation resolved quickly with money managers having moved huge amounts into cash instead. The survey from Bank of America showed that 44% of net allocations to cash reached its highest level since the 2009 financial crisis. With so much money sitting on the sidelines and the funds short, if the trade war with China can be resolved, prices could turn much more favorable.
Have a Safe Day!
Garry Gard
920-348-6844
ggard@didionmilling.com
