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Light at End of Shutdown Tunnel


Corn and soybean prices rallied Friday as news broke that the partial federal government shutdown would end with a three-week short-term funding agreement.

The reopening of the federal government might not take all the credit, but March soybeans were up 9 1/4 cents and November soybeans closed over $9.64, up 7 3/4 cents, the highest close in more than a month. March corn moved up 3 1/4 cents and December corn settled over $4.03 after a week of lower closing prices.

Agriculture Secretary Sonny Perdue released a brief statement Friday following President Donald Trump’s announcement, but no specifics on reopening procedures were spelled out for key market information.

At some point next week, possibly as early as Monday, USDA’s Foreign Agricultural Service will start to shed light again on export sales for commodities. USDA has not released export data since the shutdown began, and that has largely left commodity prices relatively flat throughout the shutdown.

In an email to DTN Friday, USDA Chief Economist Robert Johansson said the agency plans to release the next World Agricultural Supply and Demand Estimates (WASDE) report on schedule on Feb. 8. However, he said he wasn’t sure when export data would be compiled and released.

“It may be that NASS moves some of their delayed reports more quickly than Feb. 8, but they will need to wait until folks return to work before they determine what the schedule will be for the delayed reports,” Johansson said. “I expect many of the NASS reports will be released at Lockup, but NASS will be determining that schedule. The new release dates will be updated on NASS’s website as soon as possible.”

DTN Senior Analyst Dana Mantini said the government reopening will add some volatility back into what have been relatively flat markets. The trade will especially be watching to see the size of soybean buys by China in the month since the shutdown began. Before the shutdown, China had bought a little over 2 million metric tons of U.S. soybeans.

“Everyone assumes China has bought about 5 million (metric) tons of beans, and I think the trade would be disappointed if it comes in under that,” Mantini said.

Soybean exports right now remain 39% below last year’s sales at the same time, but the last estimate from USDA before the shutdown reduced soybean sales for the year by 11%. “So we have a lot of catching up to do,” Mantini said.

There could also be more bullish sales of both corn and wheat to show. Wheat currently is coming in $10-$12 under the FOB for Russia, so there are market expectations that wheat sales have picked up in the past month, as well, Mantini said.

Ken Morrison, a trader and founder of the commodity newsletter Morrison on the Markets, said it would be good to get caught up on some data points. He said he wants to know from the Foreign Agricultural Service how export sales are collected and whether that would translate into a mad scramble to send out that information.

“I think how they collect the data is an important part in knowing how long it will take to get up to speed,” Morrison said. “If exporters have the ability to go online and send it to them electronically without any person being there, that’s one thing,” Morrison said. But sales data could be more complicated if the USDA export desk walks back in on Monday and recollects sales activity since Dec. 13, the date of the last report.

“I can’t think of a more critical period of time of having the knowledge of where we stand on export sales,” Morrison said. “I have a sense, especially with soybeans, it’s really going to be important for us to catch up to see what kind of activity has been done over the last five or six weeks.”

The shutdown ended Friday with President Trump announcing he had reached an agreement with congressional Democrats. Congress later Friday afternoon began votes to pass a short-term Continuing Resolution to fund the federal government through Feb. 15. During that time, Congress and the president would continue negotiating funds for the Department of Homeland Security, border security and the southern border wall. The president said if a “fair deal” does not come out by Feb. 15, then there would be another shutdown or he would declare a national emergency to build a wall.

“I think we have a chance, yeah. I think we have a good chance,” Trump said. “We’ll work with the Democrats and negotiate, and if we can’t do that, then we’ll do a — obviously we’ll do the emergency because that’s what it is. It’s a national emergency.”

In his remarks, Trump focused heavily on stopping illegal immigration and drugs, but acknowledged that farmers and other businesses also need immigrant workers.

“There are more people working today in the United States than have ever worked in our country,” the president said. “We need people to come in to help us — the farms, and with all of these great companies that are moving back. Finally, they’re moving back. People said it couldn’t happen. It’s happening.”

Roughly 800,000 federal workers, including USDA staff, were facing the prospect of missing their second paycheck Friday as the shutdown reached 35 days. Those not already working will return to work on Monday and will receive back pay based on legislation already signed by the president.

Agriculture Secretary Sonny Perdue released a brief statement Friday, saying the president’s announcement to reopen the federal government “is welcome news, as it will bring thousands of our employees back to work and return us to our mission of providing our customers with the services they rely upon.”

“I extend my sincere thanks to the thousands of USDA workers who stayed on the job during the shutdown to offer as many of our normal activities as we could,” Perdue said. “The President has already signed legislation that guarantees back pay for all employees, and we will move forward on that as soon as possible. Meanwhile, we will prepare for a smooth reestablishment of USDA functions.”

USDA had announced earlier this week that it was recalling 9,700 Farm Service Agency employees who reopened offices full time starting Thursday. USDA had limited services available from FSA, but those services could be expanded under the Continuing Resolution, as well.

USDA also missed several annual and monthly crop reports on Jan. 11 with the understanding it would take roughly a week of full-time work by National Agricultural Statistics Service staff to get those reports released. USDA officials will have to provide some details on how they will handle those reports. USDA’s next scheduled month Crop Production and World Agricultural Supply and Demand Estimates reports are set for release Feb. 8.

To ensure the 38.6 million or so people on Supplemental Nutrition Assistance Program aid got their benefits for February, USDA released the payments early. With USDA funding through Feb. 15, USDA will have to detail how it will handle the March payments, which average about $5 billion a month. There were already some concerns about recipients balancing out payments and stretching aid through February because the payments were released nearly two weeks early.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

Source: Chris Clayton, DTN

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