U.S. farmers were relieved this week to hear that the U.S. Congress passed a long-awaited, wide-ranging $867 billion farm bill that will expand farm subsidies, support farmers’ markets, and even legalize the growing of industrial hemp.
Even better, trade talks with China appear to be improving, which boosted markets to multi-month highs. The Chinese are expected to make substantial purchases of U.S. soybeans as previously promised, and China announced it was going to begin lowering its retaliatory tariffs on U.S. automobiles.
While the trade war is far from settled, these first overtures have markets excited: December corn neared a four-month high of $3.79 per bushel this week, while January soybeans spiked to $9.28 per bushel.
Longer term, global supplies of corn, wheat, and soybeans remain ample, which could limit prices. Despite this week’s optimism, the longer-term supply and demand forces seemed to weigh on the markets, with soybeans finishing the week near its lows.
Worse yet, since China may be buying U.S. agricultural products again, the U.S. Department of Agriculture has announced that it will delay making a second round of subsidy payments for farmers affected by the trade war. While prices have rebounded, many farmers already sold much of this fall’s harvest at depressed prices, which could leave them hurting for cash.