Mid Week Comments

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Markets Stall - 11/12/19

The past few weeks have brought a lull to the grain market, with most
grains flowing lower since mid-October. The weakest of all the major
markets is corn, which has lost 25c in that time frame. Soybeans are
down 38c since 10/14, and Dec. wheat down 17c (since 10/21 highs). So
grains have definitely shown weakness in the past month. The primary
reasons are likely the improving harvest weather during that period, with
very cold but dry weather over much of the US that allowed harvest of
crops on some very wet, soggy soils. Also during that time the US/China
trade agreement has stalled - first from the cancellation of the event in
Chile where Pres. Trump and Xi were going to sign the first phase 1
agreement, and then from disagreement over peeling back existing tariffs.

Rumors abound now on the China-US trade negotiations, with China's
announcement last week that tariffs would be peeled back equally as part
of the phase 1 trade agreement (which the US DID NOT confirm). However,
what does that mean??? The US had plans to tariff the full $500 billion
of Chinese imports, and China tariffs about all of the $150 billion of US
imports. So peeling back tariffs 'equally' means what??? Is it a 3 for
1 peelback (likely the China view)?? Or a 1 for 1 peelback (US's view)??
I guarantee you China wants the US to peelback $15 billion tariffs for
every $5 billion China peels back. And China wants it on all tariffs.
Why? Because they will gain billions!

China isn't hard to figure out; whatever gives them the most money or
power, they want. There is no altruism in Communist China!!! Just ask
any relative of the 45 million Chinese killed in the first 25 years of
that communist countries' foundation. But government control of most
everything is certainly desired, and a trade deal is perhaps just as
important to China as to the US (both for the economy and politically).
In fact, economic studies show a trade deal is 3x more valuable to the
Chinese economy than in the US.

US weather was relatively favorable the past month. But perhaps our luck
is ending, as forecasts call for another week or so of cold and dry
weather for the central and eastern corn belt, while the western half of
the US enjoys above normal temps. There was a snowstorm that went from
the Great Lakes to northern New England yesterday 11/11, with flight
delays in Chicago along with record cold temps. Chicago got a few inches
of snow Monday, with Buffalo 6-10" and Vermont 7-12" - kind of a wake up
call that winter has arrived. More precip is falling today from TX to
Maine in some very cold conditions for November - more fun for
everyone!!! Farmers haven't liked the snow nearly anywhere. However,
the cold weather has allowed farmers to harvest soybeans on soggy soils -
allowing more of the crop to be harvested on otherwise unharvestable, wet
soils.

The 8-14 day forecast turns warmer and wetter, but warm in November is
still cold. And wet in November when we don't normally get much precip
is still not very wet. But when it comes in snow, .1" becomes 1" or more
of snow, and we don't need any snow right now to slow harvest.

Crop progress will come out this afternoon as the Veteran's day Holiday
was Monday. I was reminded this weekend that no Protester gave us
freedom - it was a veteran. No preacher gave us religious freedom - it
was a veteran. No reporter gave us freedom of speech - it was a veteran.
No politician gave us democracy - it was a veteran. So thank our
veterans for what they have done for you - the proper place for thanks to
an individual.

Ray can be reached at raygrabanski@progressiveag.com.
+++++++++++++++++++++++++++++++++++++++++++++++++++
Ray is President of Progressive Ag Marketing, Inc., a top Ranked
marketing firm in the country. See http://www.progressiveag.com for
rankings and link to data from Top Producer Magazine and Agweb.com.

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