Mid Week Comments
Flooding - 03/19/19
We talked about the likelihood of increased flooding this spring for the past
few weeks, and now that snowmelt has begun in upper Midwest states it certainly
has begun. IA, NE, and SD all reported flooding this week as the heavy snow
finally melted on top of already saturated soils which also happen to be frosted
deep into the earth by the winter's bitter cold temps. The ability of the
snowmelt to soak into already saturated and frozen soils is just not there.
This flooding didn't need to be predicted by a Ph.D. as it was obviously a
threat. Record high water levels in many rivers in many states is the result,
and sometimes dangerous situations with icy water and road washouts.
While the fact that snowmelt occurred about a month earlier than 2018 is good,
we have to get the water to runoff and get soils dried out before we can get
started planting this spring. The warming temps are allowing that to occur at
least, with normal to above normal temps now forecast over much of the Midwest -
a stark change from the bitterly cold winter temps.
Weather forecasts are calling for below normal precip in the US the coming week,
and below normal precip in the western US for the 8-14 day forecast. The
eastern and southern US will see above normal precip in the 8-14 day forecast.
Temps will average above normal in the western 2/3 of the US the coming 2 weeks,
but below normal in the eastern 1/3. Overall, this should help to alleviate
flooding in the Midwest, especially in SD, IA, and NE with the drier weather.
But warmer weather will bring on snowmelt in northern areas, and that will mean
more flooding in MN, ND, and WI.
Flooding will likely expand to MN, ND, and WI in the coming weeks as temps warm
and snow melts in these wet states (soils were satured from the extremely wet
fall). Its going to be an interesting spring! But with the warming temps, at
least the water will start flowing early so that the flooding will be all done
(hopefully) by normal spring planting. If temps warm as forecast, it could
bring on spring much earlier than last year's late start.
South American weather is forecast to have above normal precip in Brazil, but
almost no precip in Argentina in the next 14 days. That will aid harvest in
Argentina, but possibly dry out late season crops there as well. Temps will be
near normal in the next 14 days in SAM.
The Wall Street Journal is reporting the US semiconductor industry does not
support a trade deal with China that calls for more purchases of US chips in a
surprise announcement. But they explain that requiring purchases by the
government would force them to move assembly plants to China and away from the
Malaysian partners they currently have - and they suspect a plot by China to do
so to get more control of the industry. China is apparently a huge market for
them, but the imports are currently credited to Malaysia, not the US, since
final assembly is there. What a complicated world! Who would have thought a
company/industry would be against more exports for themselves??? I doubt anyone
in US agriculture would complain about more ag exports to China!!! Especially
considering today's depressed market.
Pro Ag notes grain markets reversed higher last week, with 14c gains in
soybeans/wheat and 9c gains in corn for the week - all after reversing the
Monday losses in the markets. That is the first positive sign in a while in a
market that has sagged recently. From Feb. 14 to Monday, March 11 wheat prices
had fallen 99c, soybeans 47c, and corn 27c in less than a month as China/US
trade negotiations were not completed as planned, and it appears no significant
agreement is expected in the near term. Pres. Trump has recently said we should
expect news in a few weeks, but the market seems quite impatient at this time.
The market and all of Ag could like to see an agreement on trade with China.
Essentially, the Chinese 'tariff' has been more like an import ban from this
Communist country as apparently the central government has essentially shut off
imports completely (by intimidation???). This is not like a tariff imposed in
the US or any other capitalist country, where exports drop slightly due to the
increased cost in a business related decision. In Communist China, citizens are
well aware of the history of what happens to citizens who don't listen to the
You get due process all right - a process of getting arrested, trial, sentenced,
and execution all within hours! And while that seems extreme on one end of the
spectrum, the ridiculous 2-4 year wait at times in a screwed up, inefficient
western judicial system is an atrocity on the other end of the spectrum. What
happened to common sense??? Did we 'educate' ourselves away from it??? On the
farm, if we operated that way, corn would be $100/bushel!!! And compared to our
judicial system, that would be a bargain.
Ray can be reached at email@example.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.
This material has been prepared by a sales or trading employee or
agent of Progressive Ag Marketing, Inc. and is, or is in the nature
of, a solicitation. This material is not a research report prepared by
Progressive Ag Marketing's Research Department. By accepting
this communication, you agree that you are an experienced user of the
futures markets, capable of making independent trading decisions, and
agree that you are not, and will not, rely solely on this
communication in making trading decisions.
DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY
LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD
INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR
RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS
COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR
JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS
COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.
The risk of loss in trading futures and/or options is substantial and
each investor and/or trader must consider whether this is a suitable
investment. Past performance, whether actual or indicated by
simulated historical tests of strategies, is not indicative of future
results. Trading advice is based on information taken from trades and
statistical services and other sources that Progressive Ag Marketing
believes are reliable. We do not guarantee that such information is
accurate or complete and it should not be relied upon as such. Trading
advice reflects our good faith judgment at a specific time and is
subject to change without notice. There is no guarantee that advice we
give will result in profitable trades.