H eavy rains across corn- and soybean-producing states has created a timid bullish commodity market. It was assumed, before the weather turned ugly, that more corn and less beans would be planted in 2019.
The estimated planted acres lost some validity once President Donald Trump announced that $16 billion would be available for soybean growers for market losses caused by the increasingly nasty tariff fight with China.
The trade fight with China has had a big impact, but a seemingly averted dispute with Mexico would have had an even larger impact on agriculture.
Mexico is the largest destination for U.S. commodities. Trump threatened to impose new tariffs on Mexican goods if that nation did not step up its efforts to stop the flow of Central American refugees to the southern U.S. border.
Negotiators late last week reached a deal in which Mexico agreed to expand the program in which it holds Central American refugees seeking asylum from the U.S.
That crisis averted, Trump turned his attention to the remade North American Trade Agreement between Mexico, Canada and the United States. That reworked pact awaits lawmaker approval in all three nations, not just the U.S., at Trump says, blaming Democrats in the U.S. House for the holdup.
Trump has repeatedly said the new arrangement would be a boon to agriculture. It could be, but the unknowns and in many cases uncontrollable aspects of his relationships with other nations are growing far faster than spring-planted crops.
Through it all, farmers face risks that none of them can control.
There are hints that the commodity markets are set for a rebound.
The United States — saddled with mammoth corn carryover stocks entering 2019 — may run short of the commodity. The laws of supply and demand may mean higher corn prices.
The ethanol industry, which at present is struggling with slim profit margins, is nonetheless consuming large quantities of corn. Large livestock operations aren’t likely to reduce their demand.
By now, what corn isn’t planted, won’t be planted. The assessment comes from a farmer who still has several acres left to go. Prevented planting, which kicked in for insurance purposes on June 1 for both Iowa and Minnesota and later in some other Midwest states, is perhaps an attractive option for some.
However, others may decide to plant corn late in hopes a lesser yield will be partially offset by higher market price.
Minnesota — at least parts of it — are in better shape than Iowa, where heavy rains have been more frequent. The planting season, when it ends, will find farmers in greater risk than before.
Prevented planting is not without cost. A cover crop must be planted to buffer fields from wind and water erosion and the trade dispute may or may not end come fall.
Federal farm policy has moved to crop insurance as a means to reduce risk and prevent the necessity of ad-hoc relief measures that routinely exceed expected cost.
The season will be painful for many. The stress caused by financial concerns is greater now that the planting season has turned nightmarish for many.
A week or two of sunshine and warm temperatures may turn things around.
When agriculture is involved, it’s best to expect the unexpected.