Normally, Karl Setzer expects the grain markets to be influenced primarily by weather, Washington and technical matters. Right now it is a weather and Washington market.
“That just seems to be what is dominating things right now,” says Setzer, a market analyst with AgriVisor in Bloomington, Illinois.
Pushing the market up, especially for corn, is the wet spring that has delayed planting in most of the Corn Belt region, but especially in Ohio, Indiana and Illinois. Putting on downward pressure is the news from Washington, D.C., regarding a trade war with China.
It has helped a little that an announcement was made regarding the removal of U.S. steel and aluminum tariffs on Canada and Mexico because that should smooth the way for approval of the USMCA, which Setzer describes as a slightly updated version of the North American Free Trade Agreement.
Confusing the issue is the announcement that the Trump administration will try to quickly put together some type of aid package for farmers who have been hit hard by the China dispute. There are numerous details of that possible aid that are difficult to sort out.
For example, is the formula and type of aid a copy of what was done last winter? If so, does the USDA wait till after the growing season, as they did with that package, or do they send out checks now? This would be a dramatic change from that package and could make things difficult to justify politically and also difficult to administer, Setzer says.
And the discussion of that while planting is still happening adds another wrinkle, possibly impacting planting decisions in a wet spring where farmers are trying to decide whether or not to switch some fields from corn to soybeans. For example, some may decide to switch to beans to take advantage of a government payment.
The corn market appears to be trying to buy acres from farmers in this process because the trade does not want farmers to plant more beans.
Setzer says that may provide some farmers with a short-term marketing opportunity in what is otherwise a not very rosy long-term market outlook.