Biggest Risk to Commodity Markets in 2020? Politics


by Tyne Morgan, AgWeb 

Jan 08, 2020


As agriculture leaps into the 2020s, the main concerns are still the same.


“The biggest concern is do we have trade deals,” said Mark Gold of Top Third.


From analysts to Washington watchers, all eyes are on what happens this month with China.


“I think the number one concern is whether we get a Phase One trade deal with China,” said Arlan Suderman of INTL FCStone. “Going forward, I think that's really going to shape the tone for the speculative funds that impact prices. It's going to impact demand, and that's what they're counting on. If we don't get the deal I think it sets a bearish tone and everything starts under that colored umbrella. And we have to prove that the demand is there.”


Last week, President Donald Trump tweeted that a Phase One deal will be signed on January 15; a positive sign for a market that’s been burned before.


“Trade policy out of Washington is the biggest concern that I have,” said Bill Biedermann of AgMarket.Net. “I mean, we've seen so much demand destruction from the last two years of tariffs, that tariffs don't work. Tariffs are a way to create a crisis so that you can solve the problem. And that's what obviously we're trying to do. But there's other ways to go about developing trade and negotiating.”


If the Phase One deal with China comes through this month, analysts think the deal is poised to move the markets and change the mood...


... Looking at more opportunities in the New Year, Suderman says African Swine Fever (ASF) is at the top of the list.


“We estimate the pork production in China is down 25 million metric tons,” said Suderman. “They're getting imports, probably going to be close to 3 million metric tons this year, which is more than twice what they've been in the past. So, they are ramping up imports of beef and poultry as well, but they're still not filling the gap. And we expect that to continue to ramp up as they try to search for more and more sources of meat that they can buy”...


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