Uncertainty in Agricultural Being Fed by Trade Disruptions

(DENVER, CO) Soybean prices surged late last quarter based on fears of delayed maturity of the U.S. soybean crop and hopes of resuming China’s market access. In a sign of good faith ahead of negotiations, which are expected to resume this month, China exempted U.S. soybeans from additional tariffs. According to the latest Quarterly Rural Economic Review from the CoBank Knowledge Exchange Division, uncertainty around the world, fueled by trade disputes, is causing greater volatility across agricultural markets. The already volatile U.S. animal protein markets have gotten even more so in the third quarter on nearly every front: feed costs, capacity disruptions, trade flows, political disruptions, and the macro-economic outlook. The impact of African Swine Fever on global pork supplies is just beginning to be felt in the U.S. animal protein sector. While prices have ridden a rollercoaster so far this year based on expectations, the reality is now hitting. Trade volume is expanding and will begin to yield benefits to producers across the meat and poultry industries. The expanding trade volume, along with the signing of important trade agreements this summer with Japan and Mexico, will also aid in improving the sluggish level of trade flows so far this year. The new trade deal with Japan also lifts hopes of renewed exports, particularly for U.S. beef and pork. In another positive development, fertilizer prices have stabilized after falling throughout the summer. Warehouse fertilizer inventories in the Corn Belt remain oversupplied following this year’s unseasonably wet weather that caused a sharp reduction in planted acreage.