A lot of emotion has been added to the grain markets these past few weeks. A market analyst discusses what will be motivating this week’s market, up next.
AUDIO: Jim McCormick, Allendale Inc.
Jim McCormick, senior adviser for Allendale Inc., says the grain markets are leary about the trade rhetoric heating up. He recalls last week?s activities, where news of additional tariffs on Chinese goods washed the markets out.
?Last week, President Trump threatened to enact even more tariffs on Chinese goods and that washed the market out, as a lot of farmers know,? McCormick said. ?We have kind of stabilized from that. Now the market is trying to see if they can cut a deal because the big day coming up is July 6. That?s when we?re going to institute our tariffs and that?s when China?s probably going to push back with their bean tariffs they?ve threatened.?
McCormick says ?the closer we get to July 6th, the more likely a deal is not going to be made.? He wonders what would happen if both the United States and China imposed additional tariffs.
?Heck – I?m kind of wondering – maybe we need to go ahead, hit each other with the tariffs, prove we?re not afraid to hit each other with tariffs and then maybe that can get them to the table and start negotiating,? McCormick said.
The markets will also be watching for reports from the U.S. Department of Agriculture on Friday. The organization plans to release its Acreage and Quarterly Grain Stocks reports.
?These acreage numbers are being surveyed compared to what farmers told the government back in March. In March, the government said we were going to plant 88.026 million acres of corn. The average trade guess is a little more for this time around, at 88.56 (million acres). The bean acres in March were 88.98. The average guesses for Friday is 89.69. So, the trade in general is looking for a slight uptick in planted acres of corn and beans.?
?As for the Quarterly Grain Stocks report, this is telling us how much grain on hand,? McCormick said. ?Then what happens from there is we kind of backtrack, especially on the corn, to give an idea of how much grain we fed. Right now, they?re going to look a little bit negative on the front. A year ago, on June 1, they estimated we had 5,229,000,000 of corn on hand. This year, the guess is 5,268,000,000 on hand. The bean stocks, a year ago, were at 966,000,000. This year we?re looking for 1.225 billion bushels.?
