After headlines proclaimed progress had been made on a trade deal between the U.S. and China, the optimism for a quick resolution took a hit. With reports coming out that a deal is unlikely to be agreed upon before the middle of May, many traders are looking at this as going back to square one.
“It feels like a rerun,” said Ryan Pfantz, a commodity marketing analyst at Mid-Iowa Cooperative. “It’s like I’ve seen this episode so many times now. It’s actually quite fatiguing, to be quite honest.”
Pfantz said there were some positives from a trade perspective, like the sale of 828,000 metric tons of soybeans announced April 1 and 300,000 metric tons of corn back on March 22. With a trade deal, more of those exports are likely.
However, he warns that the markets might not rise on a trade deal.
“You sit here and look at where prices are at, on soybeans in particular, and it feels like a trade deal is already baked in,” Pfantz said. “If some type of an announcement comes down the pipeline, I don’t think you’ll get much market reaction at all to the upside.”
That leaves markets looking domestically for reasons to move upward. With high grain stocks and carryout numbers, the weather is seemingly the only thing that can boost markets.
“We were building a positive outlook going into the growing season, but (those reports) pretty much hammered that,” Pfantz said. “That was a really bad report. (Weather is) pretty much it.”
He said the beginning of the growing season is a good time for producers to turn on their marketing switch and have a heightened idea of what is going on for the markets.
However, while weather may delay planting corn, he said the markets will be patient before making sharp moves one way or the other.
“With the yields we’ve gotten the last several years, the market is going to assume everything will be OK,” Pfantz said. “They’ll get those kinds of yields, and it will be later in the season that we’ll realize there’s a weather problem that would materially impact yields. Other than that, it seems you can almost take yields of 180 bushels to the bank.
“The trade stance, especially after the last 2, 3, 4 years, is saying ‘prove it to me that there is a weather (impact),’” Pfantz said. “We aren’t going to buy the rumor. We are going to buy the fact.”