It has been a cruel week adjusting to jet lag. It is one thing to travel to Asia and adjust to the time change on the other side of the world. However, in my experience it is much more difficult coming back to Ontario. I could never make a quick trip there in summer. On my return, I wouldn’t be able to drive a tractor safely for a week.

This past week when I wasn’t pulling over with fatigue, I was back to normal running my farm and looking over the commodity markets. While in Bangladesh, I could keep abreast of all those things in a timely manner as internet was cheap and connections were good. It is a total consternation of mine how a very poor country like Bangladesh can have such superior internet service versus a country like Canada. However, it is what it is.

Compared to the stock market our agricultural commodity markets have been benign. The Dow Jones has been frenetic having its greatest one-day loss ever last week and another 1000-point loss today. Meanwhile, our commodity markets have been doing a little better, relatively in a bearish market environment. Today, markets were reacting from the February USDA report.

The February USDA report was generally speaking bullish for corn, bearish for soybeans and neutral for wheat. USDA actually decreased world ending stocks as well as US ending stocks. For instance, US ending stocks are now projected at 2.352 billion bushels, down from last month mainly because of increased corn exports. These exports were projected partly because of a weaker US dollar and a decrease in exports from Argentina and Ukraine.

The soybeans came across as the most bearish within the USDA report. US soybean exports were decreased and this partly resulted in the soybean ending stocks for 2017/2018 to be increased to 530 million bushels. When I saw that number, I was taken aback. However, soybeans actually finished higher on the day and were in fact double digit higher at one point. Brazilian production was pegged at 112 MMT, while Argentinian production was decreased to 54 MMT. Late in the day there were other estimates of Argentinian soybean production as low as 50 MMT. Despite all of these bearish numbers, higher price action on the da signaled the strength behind soybean demand.

World ending stocks for wheat were decreased, while US stocks were actually increased to 1.009 billion bushels. US exports were lowered because of increased exports from Argentina, Russia and Canada. Needless to say, we are still in a bearish market environment for all three grains and farmers would certainly like to see some type of price rally. We’ll see what March 29th brings when the USDA actually announces its projected planted acres for 2018.

Of course, we would like to find a home for all of the grain. Much of it will surely find its way to Asia, where populations are growing along with their income. Increasingly as I walk through the crowded streets of Bangladesh you get a real idea of how influential China and India are in that part of the world. In Bangladesh you can see it almost everywhere as the country is benefiting from investments from these new economic powers. Renewed agricultural commodity demand is certainly derived from the insatiable appetite from China.

Increasingly though, that Chinese demand cannot be taken for granted. We’ve become used to growing our crops and hoping China would buy them. That has worked pretty well over the last couple of decades as global crop production has soared in concert with Asian demand. Recently, according to Bloomberg, China is looking at the potential impact of trade measures that they might impose on the importation of US soybeans. This would include antidumping and anti-subsidy probes into the trade.

There is some thought this is drum beating after President Trump announced tariffs on solar panels and washing machines from China two weeks ago. Whatever it is, it will be difficult to know until it happens or if it happens. Keep in mind that China needs the soybeans and they will not be able to get them totally from Brazil. Having said that, China gets a majority share of their soybean requirements from Brazil and this is increasing.

The concern of course for market watchers is the attitude of the American President toward China. He has been overtly critical of the Chinese, somewhat like he has been to the Mexicans. Mexico represented the number one destination for US corn, but no more. Haranguing your best customers isn’t seen as a good strategy in my book. However, our geopolitical world can be messy at times. In this case it seems all so unnecessary. Declining demand from China for agricultural commodities is something that we don’t need.

On the contrary, as farmers we need all of these markets and more. Taking China for granted was always convenient, but maybe no more. Let’s hope cooler heads prevail on both sides of the world.