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CoBank quarterly review shows enduring volatility across agriculture

Concerns over trade policy, weather and African swine fever dominated agricultural markets last quarter, causing greater uncertainty among producers, supply chains and end users, according to the latest Quarterly Rural Economic Review from the CoBank Knowledge Exchange division.

Trade negotiation breakthroughs have largely remained elu­sive and the U.S. agricultural sector is in the midst of its second consecutive harvest under the shad­ow of hefty tariffs. Lower feed prices, however, are aiding animal protein and dairy margins.

“Global trade tensions are ratch­eting up as world economic growth slows,” said Dan Kowalski, vice president of the Knowledge Ex­change. “However, the new trade deal struck between the U.S. and Japan is a bright spot and will bolster U.S. agriculture’s competitiveness into a key export destination.”

The historically late planting of the corn crop cast a long shadow through the quarter with extremely volatile cash corn prices. End users such as ethanol producers and livestock feeders bid old-crop corn supplies higher in anticipation of a short harvest this fall, with prices falling back to levels seen prior to spring planting.

Farmers continue to hold on to old-crop corn supplies in hopes that prices will recover in the months ahead on local supply shortages. But globally, grain stocks remain ample and are widely expected to dull any significant rallies in corn if har­vest reports confirm a smaller-than-expected U.S. crop.

Soybean prices surged late last quarter based on fears of de­layed maturity of the U.S. soybean crop and hopes of resuming China market access. In a sign of good faith ahead of negotia­tions, which resumed in October, China exempted U.S. soy­beans from additional tariffs.

The already volatile U.S. animal protein markets have gotten even more so in the third quarter. The impact of African swine fever on global pork supplies is just beginning to be felt in the United States. Trade volume is expanding and will begin to yield benefits to producers across the meat and poultry indus­tries. The new trade deal with Japan also lifts hopes of renewed exports, particularly for U.S. beef and pork.

Fertilizer prices have stabilized after falling throughout the summer. Warehouse fertilizer inventories in the Corn Belt remain oversupplied following this year’s unseasonably wet weather that caused a sharp reduction in planted acreage.

The full report is available at

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