Ag Economics on the Plains

High Plains Ag Week – 5/17/2019

May 20, 2019 by amarilloagecon

The week was split in to two sections; 1) Price declines from trade worries and 2) price rebounds from continued planting woes. The week started out with precipitous declines in wheat, corn, soybeans, and cotton, all trading on the previous Friday’s new tariffs from the Trump administration and the news of new and increased tariffs on U.S. goods out of Beijing. Dec Corn dropped over 2.0% from Monday open to Tuesday’s low, while wheat and soybeans dropped over the weekend. Once the new bearish news from the tariffs was priced in the fundamentals from delayed plantings and forecasts of more wet weather took hold. See the Soybean and Corn tables below for just how far behind planting is in some key states according to the 5/13/2019 Crop Progress Report. Delayed plantings mean potential for lowered supply, and therefore specs and others begin entering long positions, especially since the price was already so low on the trade spookiness. Dec Corn is showing significant strength as prices rebounded above $4.00 Thursday night. [Read more…] about High Plains Ag Week – 5/17/2019

‘It Depends’ – How do all these tariffs actually work?

May 15, 2019 by amarilloagecon

As of Friday morning, the United States has levied 25% tariffs on nearly one-third of all Chinese products in response to President Xi Jinping of China reportedly reneging on parts of a drafted agreement presented to him post-negotiation by U.S. and Chinese officials. Tariffs and trade disputes have been front-page news for over a year now, and I get questions about them all the time. The details of how tariffs work aren’t hard to understand, but sometimes the economic consequences are. With tariffs back in the news I thought I’d take a moment to explain (written and graphically as we had to do in my graduate trade class) how these tariffs actually work. [Read more…] about ‘It Depends’ – How do all these tariffs actually work?

High Plains Ag Week – 5/10/2019

May 15, 2019 by amarilloagecon

Lots of red in the contracts of interest section this week. Markets plunged quite a bit this week, largely in response to poor planting progress and the announcement of new reenacted/new tariffs on Chinese goods, which we’ll talk about in ‘It Depends’. Dec. Corn is down approximately 1.22% from the week opening and down 7.92% from its four-month high of $4.04/bu. on February 25. Seasonal trends have corn rising around 70% of years during this period, and slowed planting would normally support that, however high carryover and continued trade tensions seem to be dampening those fundamental signals.