Play Turner’s Take Podcast Episode 214

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New Podcast!

I spend most of my week at FARMCON in Kansas City.  All Southwest flights to Chicago were cancelled today so I’m recording from the Hilton KC Airport hotel!  In this weeks podcast we go over the Phase One trade deal and I also talk about FARMCON.  Make sure you take a listen to Turner’s Take Podcast!

FARMCON

Kevin Van Trump and Farm Direction put on one heck of a show this year.  FARMCON was great and I highly recommend going if you have the opportunity.  I always enjoy meeting clients at the shows so thanks to everyone who was able to come over and say high. We also so met a lot of subscribers to the newsletter and listeners of the podcast.  I always wear my bow tie to Ag events so people can find me.  Thanks to everyone who came up and said hello.

Kansas City International Airport

I was supposed to be on the first flight out of KC this morning.  The winter storm in the Midwest cause Southwest to cancel all flights from KC to Chicago.  Looks like I’ll be spending the rest of the day in the Hilton KC Airport Hotel.  Hopefully I’ll make it back home tomorrow!

PHASE ONE

In classic “buy the rumor, sell the fact” fashion, the Ag markets sold off after the Phase One signing.  The market was initially disappointed in the lack of details in the trade deal.  There was also some skepticism concerning China buying $80 billion of US Ag good over a two year period.  The markets are bouncing back today as traders figure out it is possible for China to buy $36.5 billion worth of US Ag goods in the 2020-21 marketing year.

The US wants China to buy more US Ag, energy, and manufacturing goods.  China does not want US tariffs.  The cost to China buying more US goods is far less than the existing tariffs.  Bottom line is the framework and agreement is in place for both nations to have a win-win solution out of the trade war.

Grains & Oilseeds

Corn should be range bound for the foreseeable future.  Old crop will be supported by strong basis and the belief this crop is shorter than the USDA is reporting.  It is hard to see corn trade below $3.70 in the current environment.  Old crop above $4.00 is challenging too.  There is an expectation of a big increase in new crop corn acres.  I’ve heard 94mm to 96mm acres of corn.  I personally think it will be lower as we will need more than the current estimate of 85mm soybeans acres I keep hearing about.

China will be buying US soybeans.  China may buy soybeans from Brazil first because their harvest is around the corner but later this year when Brazil runs out of beans and the US is seasonally cheaper, China should be buying in bulk. Now that the deal is signed it will be very interesting to see what the USDA publishes for demand.  Keep in mind for the Feb, March, and April WASDE the USDA will only comment on old crop demand.  May is when the USDA publishes new crop 2020-21 estimates.  Everyone will be focused on the USDA estimates for new crop 2020-21 soybean exports come May 12th.

For old crop corn I like selling it above $3.90 and buying it below $3.80 between now and mid Feb.  I think we trade in range for the time being.  For soybeans I think we can see a wide range.  Old crop can trade $9 to $9.50.  New crop can trade $9.40 to $9.80.  The South American crop will be large and China will buy soybeans from Brazil.  Demand is coming for soybeans but it might not be immediate.

I still think March Chicago Wheat is a sell at $5.70.

I just heard rumors of China buying a few cargoe...