It’s no secret grain farmers across America are hoping for a quick resolution to the tariff war between the U.S. and China, and now there is increased optimism a deal will be done.
On March 1, President Donald Trump tweeted that he did not increase the retaliatory tariffs to 25 percent and also asked China to “immediately remove all tariffs on our agricultural products (including beef, pork, etc.) based on the fact that we are moving along nicely with trade discussions.”
Many farmers are seeing this as welcome news, with analysts hopeful this means a resolution is on the horizon, and some guessing it may come within the month of March.
If a deal does come to fruition, AgResource President Dan Basse said at the Bayer AgVocacy Forum in Orlando, Florida, on Feb. 26 that he believes things will start to get back to the demand levels American farmers were used to.
“The Chinese demand is not lost,” Basse said. “I’m optimistic. I haven’t been optimistic on this for some time, but the (talks) really provided a platform for us to get this done. This could usher in the next demand driver as we see it for the next couple of years.”
He said that exports are going to be extremely important moving forward, as there aren’t too many domestic demand factors in the next period of time.
A switch to year-round E15 would generate about 200-300 million extra bushels of corn demand, Basse said, and a continued increase of the livestock herd in America could generate some more demand on feed.
However, “if you look at what’s important to the market, it would really be exports,” Basse said. “It’s something visible. That’s the kind of things that drive price and where my focus would be in terms of our opportunity going forward. I don’t see anything domestically demand-driven that will give us our next leg up.”
While nothing is finalized, Basse said farmers need to be prepared for if a trade deal gets passed, as it could significantly impact the upcoming growing season.
“I’m not saying I’m ready to step off that ledge of bullishness yet, but should we get a trade deal, the farmer needs to think and readjust his marketing programs because there could be more optimism than he’s willing to believe today,” he said.