The long-awaited Phase 1 trade agreement between the U.S. and China has been signed. This is expected to add $12.5 billion in ag sales to China in 2020 and $19.5 billion in 2021.
While the initial reaction to this would seem to be positive, there remains a large amount of uncertainty surrounding the trade package, including how the purchases will be divided between commodities. The United States also agreed to remove tariffs on $125 billion of Chinese imports but will maintain tariffs on other products until the next phase of the agreement is signed.
Market reaction was somewhat muted to the January U.S. Department of Agricuture (USDA) data given the pre-report hype. Corn production caught traders by surprise as production increased from November when a decrease had been expected.
The average U.S. corn yield for 2019 is now estimated at 168 bushels per acre, a one bushel increase from November. Even with a harvested acreage decline of 315,000 acres, this was enough...