Floods, Trade Wars & Tariffs
Too many “unknowns” cause turmoil in the markets
“It’s not what we don’t know that gives us trouble, it’s what we know that just ain’t so!”
The quote, attributed to humorist Will Rogers, is right on both counts. This year, plenty of things we thought we knew just ain’t so. And what we don’t know is giving us trouble.
For example, we know farmers can gear up and plant fast. In an average year, I heard from a farm equipment executive, farmers have about 11 good weather days to get a crop in the ground — and they get it done.
What we didn’t know was how the snow, rain, floods and saturated soils would mess up this year’s planting. Writing this in mid-June, the most recent USDA report says we’re at 92% of corn acres planted, with 7 million acres yet to go. And corn is 79% emerged, compared to a five-year average of 97%. Soybean acres are 77% planted, against a five-year average of 93%. There are 18 million acres of beans yet to go.
Also in the “what we don’t know” column is how such late planting into saturated soils will affect harvest and yield. One analyst called predicting this an “impossible puzzle.” Meanwhile, while you’re trying to take advantage of recent market rallies, river market grain elevators are struggling with a storage backup due to closed or limited lock and dam operations.
With African Swine Fever taking a huge toll on pork production in Asia, and reports of China’s herd down 22% over the past year, we know global prices will increase, U.S. production will increase and we will take advantage of a spike in exports and prices, right?
Maybe not. What we didn’t know that is giving us trouble is the impact of trade wars and tariffs. Mexico is a top customer for U.S. ham. They’ve been buying less. China ordered and then canceled 3,500 tons of pork and is retaliating with increased tariffs on U.S. goods as well.
We’ve seen plenty of turmoil in the past. Weather, politics, diseases, droughts and global swings in supply and demand have created issues with what we know and what we don’t know.
Every day, it seems, there’s another headline about something that is going to stir up the market. It’s not unusual for me to direct a few choice words at a newspaper or whatever digital device I am using to catch the news. Some words choicer than others! Still, one thing I know that is so: We work through it. We always work through it.
Here’s to meeting the challenges of today — and hoping the better days ahead get here soon! ■