The corn and soybean markets ended the week on a positive note, both slightly higher. This followed an eventful week.
U.S. and Chinese negotiators met for another week of intense trade talks and news outlets in China report a deal is coming soon. During talks this week, Bloomberg said China is proposing to buy an additional $30 billion a year of U.S. agricultural products including soybeans, corn, and wheat. On Friday, Feb. 22, Secretary of Agriculture Sonny Perdue tweeted Chinese officials have committed to buying an additional 10 million metric tons of U.S. soybeans.
Additionally, USDA held its at 2019 Agricultural Outlook Forum in Arlington, Va., releasing its first look at production, price and supply-and-demand data.
For 2019, USDA predicts U.S. farmers will plant 92 million acres of corn, which is a 3% jump from last year, and 85 million acres of soybeans, which is down 5% from last year.
As for prices, USDA forecasts a slight improvement in 2019 for all major crops, except cotton. This year’s season-average price for corn is forecast at $3.65, up 1% from 2018. The season-average price for soybeans in 2018 is forecast at $8.80, a 2% increase from 2018.
“USDA was a little less on beans and a little more corn than what some people thought, but not enough to make a big difference,” says Jerry Gulke, president of the Gulke Group. “And, of course, that's a fluid number. There’s still a chance to move acres. The March Planting Intentions report is going to be better than the one that came out this week.”
Now that we have all this information, will the grain markets be back to business as usual? That’s the big question, Gulke says.
The estimates from USDA, as well as USDA’s acknowledgment it will take time for the U.S. to work through the burdensome soybeans stocks that resulted from trade disputes with China, provide some insights into price direction, Gulke says.
“It doesn't tell me necessarily how low prices will go, but it probably tells me where they are not going,” he says. “I think the idea of getting a sustained move above 10 bucks, even with a weather problem this spring in the United States, is probably a figment of our imagination. We have to keep that in perspective.”
On the flipside, how low could soybean prices go? “Some fundamentals suggest beans could go under $8,” Gulke says. “We don't have a lot of volatility—the markets have been kind of dead for a while and in a sideways range.”
Gulke suggests farmers look through the commentary and charts from the presentation this week by USDA Chief Economist Robert Johansson. View Johansson's slides and read a transcript of his presentation.
Look for Gulke’s “Technically Speaking” column next week, which will further dive into USDA’s forecasts. Find it and more at AgWeb.com/gulke
Read more coverage from USDA’s 2019 Agricultural Outlook Forum:
USDA: Corn to Be King Again in 2019
USDA Outlook: Highlights for Corn, Soybeans and Wheat
9 Ag Statistics to Know in 2019
Ag Leaders Offer Limited Answers with USMCA Tariff Timeline
USDA: Soybean Plantings Will Decline, Corn Will Rise in 2019