Crops progressing nicely, but worry over Chinese tariffs

The corn was head high – and then some – by the Fourth of July, but newly implemented Chinese tariffs on American crops has area agriculturalists concerned.

It’s a rosy picture for the 2018 central Illinois corn and soybeans at this point, with crops further ahead than University of Illinois Extension Advisor Dennis Bowman could have imagined.

“They’re just going wild. We went from one of the latest starts in the last 20 starts to the earliest planting finishes to a (corn) crop that is maturing earl,” he said.

Progressing fast
The July 1 Illinois Crop Progress and Condition Report estimated that 40 percent of the state’s corn crop was silking, compared to 11 percent the same day last year and a five-year average of 11 percent.

And while the heat has been oppressive for area residents, the crops love it, especially when there is enough soil moisture in the ground when the warm weather hits.

Of course it is too early to say definitively, but things are heading towards an early harvest.

“If we continue with above average temperatures, we’ll be looking at around a three week earlier harvest than normal,” added Bowman. “Heat is what pushes the corn crop.”

“It’s prime environment when you’ve got the humidity, heat and had moisture going into it,” adds Topflight Grain Merchandising Manager Derrick Bruhn. “Even with the high heat you’re not seeing a lot of stress out there. There was more stress in May when it was dry.”

But concern over 25 percent tariffs on agricultural imports to China that went into effect Friday is tempering some of that optimism, especially since the United States exports large amounts of soybeans to that country. The tariffs are in response to similar ones President Donald Trump imposed on a myriad of goods that are imported from China.

It’s causing soybean prices to fluctuate wildly, with the fall bean prices dropping in recent weeks but gaining a good portion of it back with a 28-cent per bushel rally after the Chinese tariff went into effect.

Tariffs are generally not a good thing for U.S. soybean sales or prices, but Bruhn said farmers and speculators who buy into the soybean market would rather have a negative market that is known than an environment of uncertainty.

“It’s a sell the rumor, buy the fact thing,” he said. “A lot of times we over-anticipate what something might do to us, but once it’s actually in effect it gives some comfort that you know what’s happening.”

With that in mind, he did not think there would be any large scale rally for bean prices.

In his travels through the area, Bowman said he is not hearing much concern over the tariffs but that “it is something that is weighing on them, and as you’re making crop (selling) decisions for the rest of the season, you have to keep in mind that commodity prices could be even lower.”

Bruhn said there is concern “because it is hitting them directly when it comes to grain prices.” But for those who have revenue crop insurance, there is a buffer that should allow farmers some time to see if a trade agreement can be forged between the United States and China.

“Providing they have revenue crop insurance, they’ve got a spring guarantee that’s higher than the current market. It’s kind of a base level, but it takes into consideration both price and yield. And potentially we’ve got a good crop out there. It gives them some comfort level that they don’t have to necessarily do anything quite yet,” he said.

Bruhn said many farmers have a couple of months to wait the situation out, but that if it drags on until the end of summer they will have to make some commodity decisions when harvest begins.

On a side note, Bowman said things are shaping up for an early enough harvest that cover crops could be an option to help replenish the soil.

“If you use cover crops, this is a year to think about it,” he said. In this area he said cereal rye, crimson clover, turnips and radishes are cover crops that some farmers are beginning to use.

Categories (2):News, Agriculture

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