Sunday night it rained all night. Monday night we had snow.
A fair amount of corn and soybeans still remain in the fields in Ohio, but it remains to be seen just when the harvest will finally end.
Little progress was made with field work the last two weeks. USDA released its last Crop Progress Report Monday, Nov. 26, and it shows that significant acres remain to be harvested, and that little progress was made last week. As I told our Florida-born assistant pastor last week, welcome to winter, Gator Boy!
USDA says that, as of Sunday night, our corn harvest was still at 86 percent, up from the 82 percent of the week before. That is exactly where we were last year at this time, but the average is 93 percent. The U.S. is at 90 percent harvested, with just 2 percent done for the week. Last year the country was 99 percent done, and that is the average.
G20 summit
Finally, harvest is not the big news for the grain complex. Friday the 30th, the G20 economic summit meeting will start in Buenos Aires, Argentina. The big news will not be from the summit itself, but how China and the U.S. make out in negotiations on the sidelines.
This is the weekend that has been pointed to as the culmination of all the trade saber rattling of the past few months. It has been widely expected that some agreement will be reached this weekend to end the trade stalemate between the world’s two largest trading partners.
The U.S. has placed large tariffs on goods to China as a shot across the bow to get their tariffs to us reduced. In retaliation, China has put 25 percent tariffs on ag goods to China, which has effectively ended our soybean exports to them. Since we export half our beans, and since China is a huge customer, the result has been a huge break in soybean prices.
In recent times soybeans have rallied from the lows. This may come with optimism of a trade deal being made, or it may be from the realization that we are still in a world soybean market, and we are exporting to other nations as the Brazilians struggle to commit all their production to China as a replacement for our bushels.
After a low at 8.44 1/2 on Oct. 31, January soybean futures rallied the next day to add over 30 cents to the price. For three weeks after that, we have traded in a narrow band near the top of our recent range. Prices most of the time were between 8.70 and 9.00.
That changed Monday with a loss of 18 3/4 cents, to a close of 8.62 1/2 and a low for the day of 8.57. The drop was mostly blamed on fears the “sideline summit” over the coming weekend would not work out.
For farmers, the challenge is to position pricing before the coming weekend.
Second government payment
There are competing views not just of the trade resolution, but of the status of the second compensatory soybean payment by Uncle Sugar.
Previously, Ag Secretary Sonny Perdue had said that there would be a second payment after Dec. 3. Some had assumed it would be the same as the first, 82.5 cents per bushel of raised soybeans. In fact, some current talk is that there may not be a second payment, and the amount is still undetermined, if there is one.
The date of the supposed payment is not an accident. It comes after the summit the coming weekend. By the first of the week we will get the market reaction from any agreement or lack thereof. The decline Monday could be all or part of a drop that would come with no agreement.
A good deal could pump the market up a quick 50 or 60 cents. If that happens, Uncle Sugar is not locked into the 82.5 cent second payment.
While this has been going on, December corn futures put a high in at 3.79 on Nov. 8, then dropped steadily to 3.55 1/4 Monday.
While corn exports are not seeing the China drain in prices, it is hard for corn futures to not trade in sympathy with soybeans. The fundamentals have also been weak, especially with exports. We are on the USDA-projected pace of exports, but these months should be a bubble in the export charts, and they are not.
While corn and beans were in the tank Friday, Chicago wheat was firmer. The Russian Bear is growling in the form of shutting off shipping corridors out of Ukraine. This is limiting wheat shipment out of key ports.
The result Friday was a 7 3/4 cent uptick to 5.07 1/2 December futures in what has been a sideways wheat market that was struggling to stay above $5.
