Major political events shaped the news cycle this week, impacting the stock market and spilling over into some commodities. From the attempted assassination of Donald Trump last Sunday, to new reports that President Biden may announce as early as this weekend plans to withdraw from the 2024 presidential race, major news events played a role in the stock market this week.
“Something unique happened on Wednesday,” says Tommy Grisafi of Advance Trading. “We had the Dow Jones close at record highs and the Nasdaq had one of its worst days in the past six months to a year.”
Grisafi says as he witnessed the stock market make a huge shift, it didn’t have a big effect on corn, wheat, soybeans or cattle, but it sets the tone in the markets for the weeks and months ahead.
“You have to wonder, will we be paying a little bit more attention to breaking news headlines as we come into this election with 100 days left until the election,” Grisafi adds. “I do think politics will have a significant move in agriculture in the next 100 days.”
USDA confirmed on Thursday morning a purchase of 18.74 million bushels of soybeans to “unknown destinations” for the 2024/2025 year. The assumption is that buy was from China.
“A couple of days before that we had heard they were looking at U.S. soybean prices out of the PNW, looking for six or seven cargoes,” says DuWayne Bosse of Bolt Marketing. “So, that kind of matches up. Normally, export sales or a flash that size would rally the market sharply. But in this case, we’re so far behind in new crop export sales, it just kind of maybe stabilized the market, stopped it from going down, which as a producer myself, I’ll take that at this point in time.”
The purchase of new crop soybeans came the morning after GOP presidential nominee Donald Trump announced his running mate, JD Vance, a GOP Senator from Ohio who has a tough stance on trade. In Vance’s acceptance speech at the Republican National Convention (RNC) this week, Vance called NAFTA a bad trade deal and also talked about how he would be tough on China.
“We’re going to build factories again … together, we will protect the wages of American workers and stop the Chinese Communist Party from building their middle class on the backs of American citizens,” Vance said.
Vance’s protectionist stance hints at more tariffs on countries like China. So, could China come in and buy more U.S. goods ahead of possible tariffs? That’s what we asked Grisafi on U.S. Farm Report this weekend.
“There’s a certain amount of grain they need, and there’s a certain amount of people they can get it from,” says Grisafi. “It’s so easy to poke fun at politicians, especially when you’ve been in the game for 50 years. The truth is, getting politics out of it, China needs X amount of grain and when they need it, they’re going to come to us. Maybe we saw a little taste of that this week, maybe there’s a little bit more to come.”
At this point, Bosse thinks a weather premium may still be built into the soybean market. But for corn, the crop is showing huge potential in parts of the Midwest, but also trouble in those areas that have an uneven crop, especially in areas planted extremely late.
“I’m not even close to seeing a tassel pop out of any of my cornfields up here, which maybe isn’t crazy unheard of this far north, but we are definitely behind,” says Bosse, who also farms in South Dakota. “That doesn’t mean we can’t produce bushels. I always go back to 2009. It was horribly wet, we had a really late harvest, but we did have bushels.”
He also says while the crop was big that year, it wasn’t particularly good quality and shrunk in the bin.
“Basically, if you had a 20,000-bushel bin, you only took out 15,000 bushels because the crop was poor quality and very wet. So, I mean there’s holes out there in the corn crop. I think we’re close to a trendline yield of 177 bu. per acre to 181 bu. per acre for the national corn yield. But I do think we’re close to a low. I always had $3.93 as kind of a harvest-low projection for December corn, and we’re not far off of that.”
Bosse says the first sign of a low is running out of sellers, and he thinks the trade action is starting to look that way.
What should a farmer do? With on-farm corn stocks the highest since the 1980s, some farmers may be forced to move grain before fall. Do farmers keep holding on, or is it time to panic sell?
“You need to get control of at least one year,” Grisafi advises. “It’d be awesome if you said, ‘I have nothing to worry about with ‘23, that grain is gone.’ Then, get 100% control of your ‘24 crop, whether it be making cash sales, using futures and options, etc. Talk to your crop insurance agent. If you’re bold and aggressive, be smart enough to remember you do not have crop insurance on ’25. I need you to get in control of one whole crop year. If you want to invest a little bit of money in ’25 floors, I suggest it might be the best money you lose. Let’s take a chance to losing 15 to 20 cents so we don’t lose another dollar.”
