NASHVILLE, TENN. (RFD-TV) — Large grain harvests worldwide are creating new challenges for u-s farmers. According to leading grain economist Tanner Ehmke, global oversupply and ongoing trade tensions are weighing on grain markets, making it harder for producers here at home to move crops into foreign markets.
“A high level, first of all, across the entire grain and oilseed space — really, the theme is oversupply,” Ehmke explained. “We’ve had record crops here in the U.S. We’ve got a record crop forthcoming in South America. We’ve had record crops and record yields all over the world, really, and so trying to find new markets is of the utmost importance. That’s a challenge, obviously, when we have trade uncertainty. The trade war that we’ve had recently with China upended a lot of our exports, particularly for soybeans and also other commodities like grain sorghum, which are highly dependent on the Chinese market, and other specialty crops. But really, soybeans are the high-dollar export. That’s the number one export from the U.S. over to China.”
Ehmke says a lot of industry speculation revolves around the future trade relationship between China and the U.S. “We’ve obviously, here the last few weeks, since the end of October, been wondering about what this relationship looks like, going forward, between the U.S. and China,” he said. “Since we had a trade truce – we call it a trade truce because we can’t really call it an agreement. We haven’t seen anything signed. There are no trade documents formalizing anything whatsoever that we can confirm. So, as a result, we just kind of have to go off of what we’re hearing and seeing from the marketplace. China is back in the market buying soybeans from the U.S. after having been absent for several months.” Ehmke said there are some market factors in China that may impact soy demand in the short term, pointing to the country’s slowing economy and declining pork consumption.
However, as we close out the year, most agriculture leaders, lawmakers, and grain traders say one sector is showing strong momentum: ethanol. Growth Energy CEO Emily Skor says now is the time for a legislative push to get year-round E15 across the finish line.
“California legalized it, so it is now able to be sold in all 50 states,” Skor said. “We have increased the amount of fuel retailers selling E15 this year by almost 25%. We haven’t seen that kind of an increase since, I think, 2018. So, we have momentum. We have a lot of conversations on Capitol Hill and in Washington, D.C., about getting a legislative fix done once and for all so we can sell this year-round, every state, every month, every station. It’s top of mind for Congress, and it’s top of mind for the White House as well, and there are a lot of conversations. Does the White House encourage Congress to take action? We’ve got bipartisan support.”
Skor said another key issue in Washington is farmers’ push for trade, not aid. She notes that the ethanol industry is on track this year to export more than ever before and says the Trump Administration’s trade policy has been welcome news for ethanol.
“For the ethanol industry, we have seen upside for ethanol in the trade deal,” she said. “And the trade negotiators, they understand ethanol is a net surplus in terms of trade. And so, if you are looking to reduce a trade deficit, ethanol is a great way to do that. In the UK, in Japan, in Vietnam, we’re seeing good upside. We just want to keep that trend continuing.”
Skor said conversations about using ethanol in marine fuel, given its affordability and lower carbon intensity, make it appealing to global markets.
