The markets are not having a good moment as we speak. The numbers in the red today are proof of that fact. We have seen numbers that suggest that farmers are holding on to large amounts of old crop that they haven’t sold. Usually, this time of year isn’t the greatest for old crop markets, because the globe is starting to focus on what we will be able to provide at harvest time, which will be here sooner than we think.
The problem, in part, is that we are also just not moving grain internationally. Sales are okay at best, and we are not seeing some larger sales to China, even just on paper for this fall. Just last week, we saw our first flash sale, officially, to China. Tyler Schau is with AgMarket.Net. He talks about China’s purchase and how the market is viewing that.
However, the news is not necessarily good. Just because China has made a purchase, doesn’t mean they’re going to take that delivery. The money can’t be counted until we have it in our hands. When you look at how much China has invested in South American crop production so they can guarantee a supply; they are not necessarily going to look to the United States until they have to. When you couple that with a rocky trade relationship as of late, it’s a tough sell to the world’s biggest buyer.
When I was in Brazil, you saw the available acres that still could be put into crop production, and it is astronomical. When there are no government assistance programs to help farmers either get started or continue development, you cannot blame the farmers for wanting to get financing where they can. Schau agrees that this situation is going to force us to develop those other markets more.
Outside of international concerns, the macroeconomy is also a large factor. With the events of the past weekend, the markets could start to become unsettled. There are also a lot of economic policies hanging in the balance of the election. The markets are holding higher for longer, and they are going to ride that wave as long as they can, but still remain cautious. Risk management must be a part of your plans and it can stretch to your livestock as well. It doesn’t just protect your grain numbers.
You can learn more about the information and market analysis that AgMarket.Net provides by visiting their website.
