Tag Archives: 2020

The new year is fewer than 10 days old and already promising to hold new twists and turns for trade, particularly as policy debates, presidential politics and geopolitical issues heighten ahead of the November elections.


Here’s a quick review of movement that could impact sales of U.S. grains and related products, including distiller’s dried grains with solubles (DDGS) and ethanol, in 2020 and the years to come:


The U.S.-Mexico-Canada Agreement (USMCA) continues to move toward ratification in the U.S. Congress, having already been approved by Mexico and with Canada set to consider the agreement later in January. If these timelines hold, USMCA could be in force by spring, restoring certainty to the trade relationships with the closest and largest U.S. grains trading partners. In addition, the agreement will serve as a blueprint for future trade agreement negotiations.


A phase one agreement with China is expected to be signed on Jan. 15 and go into effect within 30 days. The agreement reportedly includes a commitment by China to purchase $40 billion to $50 billion in food and agricultural products over the next two years. Though details are yet to emerge, it is anticipated that China will exempt the current retaliatory tariffs and remove other trade-distorting tariffs as part of this package. Equally important, China agreed to provide structural reforms to remove major non-tariff barriers subject to monitoring, review and enforcement mechanisms.


On Jan. 1, the phase one trade agreement between the United States and Japan became effective, leveling the playing field for U.S. agricultural products competing there with products from the European Union (EU), Canada, Australia and New Zealand – all of which already enjoy trade preferences with Japan. The agreement will eliminate tariffs, enact meaningful tariff reductions or allow a specific quantity of imports at a lower duty for key U.S. ag products. A broader, phase two negotiation is expected to begin in April.


The United Kingdom‘s (UK) expected departure from the EU on Jan. 31 will tee up negotiations for a potential U.S.-UK free trade agreement. A deal with the world’s fifth largest economy would offer opportunities for free and fair trade, strengthen the transatlantic economic and strategic relationship and help promote economic growth in the European region. At the same time, the UK must determine what its future trading relationship with the EU will entail, particularly whether it wants to align itself more closely with EU or U.S. regulatory standards in areas ranging from agriculture to the environment.


Since failing to initiate formal trade negotiations over the last 18 months, the United States and EU have become entwined in numerous trade policy disputes, the most prominent involving a long-running World Trade Organization (WTO) fight over EU government support for Airbus and the EU’s counter-complaint against U.S. support for Boeing. Yet another dispute involves potential duties in retaliation for France’s new digital services tax. Whether these disputes – along with existing tariffs on aluminum and steel and threatened tariffs on autos – will move both sides to engage in a full-fledged bilateral free trade agreement remains to be seen. With a newly formed European Commission in place, EU Trade Commissioner Phil Hogan and U.S. Trade Representative Robert Lighthizer are expected to meet in mid-January.


The U.S. government continues to engage with the Indian government to revisit a wide range of policy issues, including prospects for DDGS and ethanol. Among the irritants stalling the process has been the cancellation of India’s preferential trade treatment, offered to developing countries on some goods and services, under the U.S. Generalized System of Preferences (GSP) program.


Finally, speculation continues about with which other countries the United States could embark on trade negotiations, including Vietnam, the PhilippinesTaiwanBrazil or a model trade agreement in Africa. Pending anti-dumping and countervailing duties allegations against the United States will be adjudicated in South America. And to help farmers and agribusiness stakeholders make sense of it all, the Council, National Corn Growers Association (NCGA) and 10 state corn organizations are hosting trade school workshops across the Midwest this winter.

The land market in 2019 continued the plateau trend of the past several years, where the supply of agricultural land for sale on the market remained lower than average, and prices for good quality cropland held mostly steady.

Farmers National Company says farmland sale activity in the first part of 2019 was slower than it had been for some time with late spring and early summer, especially void of farms for sale. Planting delays and prevent plantings contributed to the sluggish activity. However, despite the slower land market, Farmers National Company and its agents saw a 25 percent increase in acres sold in 2019 from the prior year and the most since 2014.

Several factors will impact the 2020 land market, according to Randy Dickhut of Farmers National. He says Interest rates are low and are poised to remain so during the foreseeable future. Overall, he says, “agriculture is in adequate financial shape, but there are individual and regional concerns.”

The U.S. Department of Agriculture has approved industrial hemp licensing plans for Louisiana, Ohio and New Jersey. The states are the first to get such approval, though 34 other states have hemp research or pilot projects under a 2014 law.   The state of Nebraska has submitted their plan to the USDA and is awaiting approval.

Louisiana’s Agriculture and Forestry commissioner says he’s pleased to be on track to issue licenses for the 2020 planting season. The federal government legalized hemp last year.

Hemp is related to and looks like marijuana but contains only traces of THC, the chemical in marijuana that gets people high. Hemp fiber and seeds are used to produce textiles, rope, paper, cosmetics, fuel, and CBD, among other things.

Missouri Farm Bureau (MOFB) recently took the temperature of the farm economy with its fourth-annual Farmometer survey. Attendees at the MOFB Annual Meeting in early December were asked to complete a questionnaire on agriculture-related topics. The questions have been identical each year of the survey.

Missouri farmers are losing some of their optimism after six years of low commodity prices and two years of record-breaking weather events and trade wars. While two-thirds of respondents are optimistic about 2020, 13.9 percent say they are pessimistic. This is more than double the 2018 rate of 6.4 percent and almost four times 2017’s level of 3.8 percent. A rise of this magnitude may show farmers’ patience is starting to run out.

For the fourth year in a row farmers said commodity and livestock prices were the biggest challenge in their farm operations. Input costs held their place as the second-greatest concern out of the Farmometer’s 11 choices. Access to capital was the third-highest concern, continuing a steady rise from 9th in 2017 and 6th last year. Succession planning came in fourth. With narrow profit margins throughout the industry, financial concerns will likely remain top of mind for quite some time.

One of the most troubling signals coming from the survey relates to the next generation of farmers. In past years, almost all respondents said they would recommend that their children follow in their footsteps as farmers. The first three years of the survey, the number of people who disagreed never broke seven percent. This year the number shot up to 15.4 percent, nearly triple last year’s 5.3 percent. Hopefully this only reflects current frustrations and will not lead to fewer young people taking over the family farm.

The survey was not without good news, though. Government regulations sank to the eighth-biggest challenge out of 11 options. In the 2016 survey, respondents rated over-regulation as their third-greatest challenge. Also, for the second consecutive year, uncertainty of federal farm programs rated as the dead-last concern. Farmers appear to be comfortable with the current state of the Farm Bill and other federal agricultural policy.

Farmers were again almost unanimous in saying they believe it’s valuable to stay involved. Over 98 percent said activity in farm and commodity organizations is important. The same number said it’s important to communicate with consumers. More than 95 percent find it important to form relationships with elected officials. These numbers have also remained very stable over the survey’s first four years.

Recent announcements of progress in trade disputes and the potential for a better growing season mean 2020 could still have reason for optimism. No matter the sentiment, Missouri’s farmers will move forward, always hopeful that next year will be better than the last.


How would you summarize the corn and soybean markets for 2019?
What is currently impacting the corn and soybean markets?
Trend following funds are short corn and soybean.
Palm Oil
Possible Trade Deal with China
South American Weather
Why are the funds still short the corn and soybean markets?
How is Palm Oil impacting the soybean market?
What is the latest on Trade Deal with China?
How does South American weather look?
What will marketing corn and soybeans be like in 2020?

A quarterly report to the Farm Credit Administration last week suggests commodity prices will mostly remain low next year. The report cites large global supplies of crops in storage, saying that will limit attractive price opportunities for U.S. farmers.

For the next three years, soybean prices are projected at roughly $8.50 a bushel, with corn at $3.70 a bushel. The report says livestock and dairy returns are likely to be positive in early 2020, but trade risks remain elevated. Meanwhile, the report says that while it’s been a difficult year in 2019 for farmers and ranchers, facing trade disruptions, weather extremes and low prices.

Crop insurance indemnities, farm programs, and Market Facilitation Program payments continue to provide financial support to the farm economy. The report says farm financial conditions may become more challenging next year without stronger markets, or more aid payments.

Further, the Farm Credit System remains financially sound, according to FCA, and lenders continue to have the risk-bearing capacity to respond to the credit needs of agriculture.