Corn and Soybeans with China map

Tensions between the United States and China again flared up this past week and threw another wrench into the grain markets.

“This kind of bubbled up in the middle of the night Sunday,” says Don Roose, president of U.S. Commodities in West Des Moines.

What bubbled was the fact that in recent weeks, China changed the rules regarding the governance of Hong Kong. The United States has criticized China’s moves regarding Hong Kong. And rumors came out over the weekend that China had told the top two government buyers to halt any grain purchases from the United States.

“That’s the big elephant in the room (at the moment),” Roose says.

Of course, there are already enough negatives in the grain market discussion, Roose says. There are large international supplies. The United States is still in a trade war with China. The coronavirus has hammered the world economy.

More bad news isn’t welcome, he says.

The best news is probably the idea that it may be difficult to go much lower or for the world news to get much worse, he says. And Brazil is now being hit hard by the COVID-19 situation and that could benefit U.S. farmers in the short run.

With all of those things in mind, Roose says grain storage may be one of the biggest items for farmers to take into consideration when updating their marketing plans. While there is little price incentive to sell new crop grain at the moment, most farmers need to move old-crop grain before the harvest and many may also need to line up some storage or sales for new crop grain.

Roose says the carry in the market is better for corn than for soybeans, so for some farmers the choice may be to sell corn rather than beans to take advantage of that difference in the market.

Gene Lucht is public affairs editor for Iowa Farmer Today, Missouri Farmer Today and Illinois Farmer Today.