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Uncertainty and volatility ahead

Photo Courtesy of Stewart-Peterson

AUDIO: Agribusiness Matters 4-5-18

Take a deep breath. Uncertainty and volatility are likely with us for the duration of the trade dispute with China.

China’s response to President Trump’s tariffs has made the entire agricultural industry nervous, with soybeans showing the most volatility in the past 24 hours.

Market analysts remind growers that a 60-day negotiation period is part of China’s counter offer to U.S. tariffs. During that time, it is hoped cooler heads prevail.

At the same time, agricultural groups are asking why their commodities, from soybeans to grain sorghum to corn, should be penalized when they are diminishing the trade deficit not increasing it. Bryan Doherty, from commodity risk management firm Stewart-Peterson, says its important to be calm, as markets can overreact when uncertainty and unknowns become a driving force.

“The majority of beans are growing in one of two places: the United States of South America. You have a western hemisphere pot to choose from,” Doherty said. “If you have a tariff from China on beans, somebody else out there that buys beans will buy U.S. beans. I’m not concerned about it. It’s concerning, but I’m not overly concerned about it.”