Normally crop insurance has a propensity for overproduction. These are not normal times. This year it is the opposite. A feature of crop insurance covering nearly 90% of Midwest farmers is creating a paid set-aside which is distorting the grain market. It is forcing the market to bid against the prevented plant (PP) payment to offset the damage created by Mother Nature. The impact is unintentional and is only exposed by the extreme delays in 2019 planting.  Those of you under the age of 40, google set-aside policy to see how US Ag programs of the 1970’s and 80’s promoted production for non-US producers. South America is a major benefactor of the recent market rally, as they were back in the 70’s and 80’s. PP forces the market to bid until enough planting is complete. Will planting proceed enough this week or will it push into July? What will Mother Nature dictate? More importantly, what happens to prices once the bidding is done? How many will suffer “Buyer’s Remorse”?

Look for the full report in the IAG Interactive Masters

On Friday, May 10th the World Board (WAOB) will publish the first corn and soybean balance sheets for the 2019/2020 crop year. Based on the weather model employed by the USDA, I estimate the initial USDA yield for corn will be around 173 bushels per acre, 3 bushels per acre (bpa) below the trendline yield of 176. The model calls for a reduction of around 2.89 bpa for every 10% the US planting progress lags the average on 5/15. The average planting pace for May 15th in their model is near 80%. Some interpolation/extrapolation will be required. Our analog year is 2013. Planting progress went from 28 to 71% complete from May 12th to the 19th. The corn yield in the May 2013 WASDE was 158, 5.6 bpa below the trendline of 163.6 published at the 2013 USDA Forum. The Westcott‐Jewison model is used for guidance on WASDE yields for May – August reports. The surveyed yields will not begin until September this year. The yield adjustment will likely keep USDA 19/20 corn end stocks around 2.1 billion bushels. The lower yield estimate will keep balance sheets artificially low this summer.

ASF = Bullish Pork
ASF = Bearish Soybeans
ASF = African Swine Fever

If you wanted to create the highest negative impact to world animal agriculture, with the least effort, Chinese pork would be your target. It seems African Swine Fever, knowingly or not, has made that decision.

China has apparently offered to purchase an additional $30 billion of US agricultural products as part of the new trade agreement. That sounds amazing! The additional purchases would apparently encompass ten commodities. I say apparently, because like much of the China trade news, it lacks any detail and substance and leaves us guessing the impact. The impact could be that China is "buying off" the US trade negotiators. "Buying off" is a term used this week by Secretary of Agriculture – Sonny Perdue. So, we ask the question: what does it look like? Would it mean China is buying US corn or wheat? Does it mean China is consuming more – that's what's important – will it be new demand?