Neal Tacke / Grain Merchandiser
Looking back it is hard to find any positive news for markets since harvest. Trade tariffs, a slow down in ethanol production, a large Russian wheat crop with aggressive selling, large crops in South America and now a big US wheat crop on the way have all chipped away at values.
Trump has been trying to fix trade inequities with China. He hit them with tariffs last year and they retaliated with tariffs of their own. Their tariffs affected purchases of US grain, in particular, soybeans and soybean meal. They also hurt our milo market. Negotiations to resolve these issues have been ongoing for several months. At one time it was looking as if we were close to reaching some agreement scheduled for early January. That was postponed and since then, progress has always been around the corner but elusively moved back further and further. The latest is maybe something in June. Even then it sounds as though first quarter of 2020 will be the nearest we will see some definitive action.
The wheat market looked like it had some potential in early January when rumors were out that the Russians were getting their crop down to where the government was going to step on the export brakes to keep an adequate domestic supply. That point never happened and they have been beating us out of export business all winter and spring. Below is a seasonal chart for wheat. The green line represents a 30 year average while the bar chart is the market so far this year. As you can see on average the best time of year to be contracting some new crop is typically October through February with another bump in May. The wet fall continuing with good moisture into spring is making the US winter wheat crop look very good and prices are falling steady. If you missed the earlier opportunities our best hope may be May if not a pre-harvest push. If July futures get over 4.50 be looking to get some contracted.