CoBank Says Trade Uncertainty Fueling Ag Market Volatility

(DENVER, CO) Uncertainty over trade policy, weather, and African Swine Fever dominated agricultural markets last quarter, causing greater volatility across the industry that’s affecting producers, supply chains and end-users, according to the latest Quarterly Rural Economic Review from the CoBank Knowledge Exchange division. Trade negotiation breakthroughs have largely remained elusive and the U.S. agricultural sector is preparing for its second consecutive harvest under the shadow of hefty tariffs. Lower feed prices, however, are aiding animal protein and dairy margins. Dan Kowalski, vice president of the Knowledge Exchange division at CoBank explains “the new trade deal struck between the U.S. and Japan is a bright spot and will bolster U.S. agriculture’s competitiveness into a key export destination.” The historically late planting of the corn crop cast a long shadow through the quarter with extremely volatile cash corn prices. End users like ethanol producers and livestock feeders bid old-crop corn supplies higher in anticipation of a short harvest this fall, with prices falling back to levels seen prior to spring planting. Farmers continue to hold on to old-crop corn supplies in hopes that prices will recover in the months ahead on local supply shortages. But globally, grain stocks remain ample and are widely expected to dull any significant rallies in corn if harvest reports confirm a smaller than expected U.S. crop.