All commodities are stronger this morning with corn up 4, soybeans up 7 and wheat up 6. The reason for the stronger markets to start the day are reports from Bloomberg that top Chinese and US trade negotiators will speak as soon as next week on progress in implementing the Phase 1 trade deal after President trump threatened to “terminate” the agreement if China wasn’t adhering to the terms.
The planned call will be the first time Vice Premier Liu and USTR Lighthizer have spoken officially about the agreement since it was signed in January. China promised to buy $250 billion worth of US goods and the pressure to catch up in their buying is mounting.
Weather forecasts for the next couple weeks is cooler, but mostly dry which should aid in US producers wrapping up their planting of the 2020 crop. This crop is a long way from being in the bin, but aside from some weather issue during pollination I don’t look for any crop issues to move this market higher.
Producers should be taking advantage of bumps in the market like we are seeing today to get old and new crop sales on the books. Ethanol stocks are still very high and plants are not coming back on line anytime soon. While margins have improved in the last two weeks, they are still deeply in the red. As this crop continues to get in the ground at a record pace and demand remains low, the markets are going to struggle to rally regardless of how much China says they are going to buy. Remember this is an election year and there will be a lot of things said that may not be followed thru on and trade deals could very well be one of them.
Producers can currently lock in $3 old and $3 new crop corn. While these numbers may not seem good, they are a lot better than $2.50-$2.70 that we have seen and are expecting for fall.
Have a Safe Day!