Q2 2019: Agriculture Still Waiting For Relief

March 2019 - Dan Kowalski, Tom Binet, Crystal Carpenter, Tanner Ehmke, Jeff Johnston, Will Sawyer and Will Secor

Key Points

In this issue

  • Trade negotiations with China will carry on at least through April, and perhaps into the summer. However, an agreement is in the interest of both the Xi and Trump administrations, so a deal is expected to be struck.
  • The ratification of USMCA in Congress will be an uphill climb. If it is not approved by August, the deal may languish until after the 2020 U.S. elections.
  • The global and U.S. economies are slowing, causing central banks to turn more dovish. The Federal Reserve is unlikely to raise rates in 2019, and is now fielding questions on whether a rate cut may become appropriate.
  • Recent flooding in Nebraska and Iowa is threatening farm livelihoods, disrupting transportation, hurting ag retailers and processors, and will impact the country’s 2019 corn/soybean acreage mix.
  • Hog herd reductions in China resulting from African swine fever will boost China’s pork imports in 2019. How much, from whom, and when are now the key questions.
  • U.S. dairy supply appears to have stabilized and markets could improve in the second half of 2019.
  • California is free of drought for the first time since 2011. Cool and wet conditions have been welcomed, but the rainfall has caused some trees to uproot and has increased the need for fungal controls.
  • U.S. natural gas supply will outpace demand through 2019. This will limit upward price movements, furthering the retirement of coal-fired assets.
  • The FCC’s latest millimeter-wave spectrum auction began in mid-March. Cable operators are not among the 38 qualified applicants, perhaps indicating that they don’t see fixed wireless as a threat to their cable broadband business.

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