News about trade negotiations appears to be taking a backseat in the markets as planting season begins to dominate farmers’ minds.
With reports that a U.S.-China trade deal could be agreed upon in June, Allendale Chief Strategist Rich Nelson said the markets are going to wait until there is more hard evidence.
“On that story, I think the grain markets have stopped trying to guess when the trade agreement will be met,” Nelson said. “In my viewpoint, that’s kind of on the back burner. I think the much bigger issue in front of us is the spring planting concern.”
Planting across much of the Midwest will require planning and shifting weather patterns, as many areas are currently dealing with flooding and excessively wet soil conditions.
Nelson compared this season to 2008, when he said producers missed the corn planting window, but due to the price incentive still ended up planting in June. In following years, though, the Midwest left more acres unplanted, which is his concern for this year, he said.
“I’m leaning now toward the viewpoint where we should start writing off some acres overall, not even just to switch them from corn to soybean,” Nelson said. “I think we’ll see lower acres than what’s posted on this coming March Prospective plantings.”
With poorer conditions come the hope of rising prices to balance it out, which may happen, but Nelson said producers may need to be patient.
“We’ve been thirsty and searching for any type of positive news in this market,” he said. “This will be (positive). One thing I do have a little concern about is oftentimes these late plantings or heavy soil moisture situations don’t give us a rally right off the bat.”
While the Prospective Plantings report may give an indication where the markets may be headed, Nelson said the report that has potential to be a market mover is the Grain Stocks report.
“This one can give us some concern,” he said “In the past few months we’ve had lower than expected corn demand for both exports as well as ethanol, so that will be recognized on the report, so that could limit some of the hopes for a rally on the corn end right off the bat here.”
Both reports are scheduled for release Friday, March 29.