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Will demand be affected by trade deals or is it fluff?

We have been celebrating the signing of the Phase-One trade deal with China and the passage of the United States – Mexico – Canada Agreement out of congress. These were two support pieces we longed to see to help get things turned around in the marketplace, right?   That’s what we have been told. However, is there enough in these trade deals to get us back to a level of prosperity in the agriculture industry, or is it just fluff?

Steve Johnson is a Farm Management Specialist with Iowa State University Extension. He recently spoke with us about where things are as he sees them. The first thing he talked about was how Iowa came out of 2019, and what that did to prices. He also said that domestic demand has been supportive.

Johnson talked about the hype we have had in the past few weeks surrounding USMCA and China. Johnson says securing a trade deal with our neighbors is a strong win, but we just don’t know how good the trade deal with China will be at this point. Johnson says there is a lot of talk about how much Ag products China must purchase. Johnson says to not be fooled; China won’t do anything it doesn’t want to.

Johnson says despite all these question marks with China, he is “bullish on agriculture.” Especially animal protein agriculture. China will still be a better deal than we had during the trade war and having Japan and USMCA deals will be of great benefit to our markets.

There is a lot of wait and see with how trade will affect markets in 2020. Farmers need to be securing a strong strategy with their advisors.

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