Presidents Trump and Xi

President Donald J. Trump participates in a bilateral meeting with President Xi Jinping at the Great Hall of the People Nov. 9, 2017, in Beijing, People’s Republic of China. (Official White House photo by Shealah Craighead)

Grain markets have spent more than a year hoping for a resolution to the U.S.-China trade war, and the better part of 2019 concerned about yields after a tumultuous weather season in the Midwest.

Mike Zuzolo of Global Commodity Analytics said that until something concrete happens in the trade war or the USDA releases the final harvest acres and yields in its January report, he does not expect much to change in the markets.

He said political pressure from ongoing protests in Hong Kong and the U.S. Congress introducing a bill in support of those protests, along with the ongoing impeachment hearings in the U.S., may make it more difficult to sign an agreement on a “phase one” deal. That may mean any purchases that are on the books for future months could be in jeopardy.

“It opens the door to around 5 billion metric tons of soybeans we have set sail to China — that they’ve booked — that could be open for cancellation,” he said.

Zuzolo noted the impeachment hearings of U.S. President Donald Trump may impact the way China is approaching negotiations on a trade deal.

“Why not force President Trump into a more defensive posture because of impeachment?” he said. “He might be more willing to negotiate and they’d get more out of that and bring it out further into the 2020 election.”

If there are any further delays, Zuzolo said there is a “potential land mine” coming on Dec. 15. Tariffs are scheduled to increase on that date in the absence of a trade agreement, and while it focuses largely on consumer electronics and other goods, it may impact the economies of both countries.

“It may be a point of no return in terms of good faith negotiations,” he said.

Domestically, the main concern for Zuzolo is the slow corn harvest in states such as Wisconsin, South Dakota, North Dakota and Michigan, which make up 12 million acres. With a wet long-range forecast for the end of November, he worries corn may stay in the field until Christmas, and it will dramatically affect the number of bushels that will be lost.

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