Headlines:
USDA Says Farm Real Estate Prices Holding Up, but Worried About a Fall
The U.S. Department of Agriculture is concerned about a potential decline in farmland real estate prices, but has seen no sign of that happening so far, USDA chief economist Robert Johansson said on Thursday. Farmland prices are a key pillar of equity for the U.S. agricultural heartland, which has been suffering from lingering weakness in commodity prices and loss of key export markets such as China due to President Donald Trump’s trade disputes. A potential significant price-drop in farmland is something “we are concerned that may happen,” Johansson told Reuters in an interview on the sidelines of the USDA’s annual forum. “But land has been consistently able to withstand some of these pressures on farm income over the past five years for sure,” he said. US farmers, a key constituency for Trump, have borne the brunt of his bitter trade disputes. Exports to China have fallen more than 90 percent in the 2018-2019 crop year, according to USDA data, and China has dropped to the fifth biggest market for U.S. farm exports from being the top in 2017. That has fueled an increase in farm bankruptcies, but not a corresponding drop in land prices so far.
Soybeans May Lose Less Land to Corn Than Expected
The U.S. is awash in soybeans, the result of the trade war with China — which has crimped exports — and a string of bumper crops that are clogging storage bins. Although farmers were expected to respond by planting more corn this year while cutting back sharply on soybeans, there is skepticism that a large rush to corn will actually occur. Soybeans may be nearly as profitable as corn in the Midwest this year, said economist Gary Schnitkey of the University of Illinois after comparing likely expenses and revenue from the two crops. “Projected returns call into question assumptions of large switches of acres from soybeans to corn,” wrote Schnitkey at the farmdoc Daily blog.
Summary:
Reporting from this morning that are indicating that China is pledging to spend $30 billion to import US ag goods including corn, wheat, and soybeans. The USDA Agricultural Outlook Forum kicked off today in Washington DC. Tomorrow, we will get the big data dump of export sales to finally get up to date.
President Trump commented that China would buy “a lot of corn. More than anyone thought possible.” His statements gave strength to the grain markets over the course of the day. As the US and China continue to negotiate, two items on the quick list of remedies include removing tariffs on US ethanol and DDGs. The Ag outlook forum released corn plantings at 92 million acres. Corn market had a good day on the talk of China reducing tariffs. China plans to increase acres for soybeans in 2019 by almost 1 million. They plan to boost subsidies in northern areas to increase plantings. Beans bounced back on optimistic news on trade with China and the outlook conference cutting bean acreage. Egypt bought 360,000 tons of wheat. Half was French with a cargo each of Romanian, Russian, and Ukrainian wheat. The US did not have any offers in the tender despite relatively cheap freight rates. The Ag outlook forum released wheat plantings at 47 million acres. Wheat is turning around on positive news across the grain sector and seeing a bounce after hitting new lows yesterday.