As we turn the calendar on 2018 grain markets, it’s a time of reflection, but also one of planning. That being said, as a company, FarmLead is also reflecting on 2018 and planning for 2019 with some new products and tools! We’d love for you to have some input in the evolution of FarmLead (including some early access to try out some new tools) and so, before continuing your reading, please answer this 4-question survey. Thanks!
A Recap of 2018 Grain Markets, Prices
Grain markets in 2018 was not something that similar to years past.
Mainly, there was no playbook to factor in the growing geopolitical risk and the risk of populism around the world. Nowhere was this more stark than in the protectionist trade policies of a few governments, the largest of whom is the United States of America. 
I’m not here to say the approach of the current White House administration is right or wrong, but what is easy to conclude is that it created an unknown playing field for grain markets for which it was tough to play on. There have been some comparisons to the likes of the 1970s and 1980s when you saw embargoes on specific countries like Russia for wheat. However, the reality is that we live in a much more globalized economy, and so when one major economic player like China or the U.S. shifts its trade policy, the whole world is affected.
Trade Policy Disrupts Grain Markets
From basically February 2018 onwards, every week and tweet from the Oval Office brought a potentially different outcome than the previous week for grain markets. With China such a large consumer of agricultural products, namely soybeans, we felt the reverberations every week as policy rumours floated around like wildfire.
The U.S. was not the only protectionist player at the table though. We’ve seen Italy batten down the borders in terms of the durum trade, let alone some of their other “special products”.  This has threatened the signing of the Canadian-EU free trade agreement (also known as “CETA”).
Then, you have India where the Modi federal government has chose to support their own farmers at all costs. While I understand and respect the purpose behind this initiative, the policy flip-flopping is one that’s been criticized by many, including yours truly) and the impact on the trade of Canadian peas and lentils has been more than negative.
On the positive side, we did see a few more free trade deals come through, including the CPTPP agreement between 11 Pacific Rim countries, including Canada. This deal will see more opportunities for Canadian agricultural products to make their way into the growing middle class of Asian economies including Vietnam, Malaysia, Japan, and Singapore.
As a reminder, U.S. President Trump opted out of the CPTPP deal back in January 2018 but has suggested that he’d be open to coming back into the deal if the terms were improved for the United States.
Also, the new NAFTA agreement between the U.S., Mexico, and Canada – appropriately named the USMCA – should help guide trade within North America for the next few years. While it took awhile to get to the new free trade deal,
However, the new deal has a new troubling clause that requires a USMCA member country to provide notice and information to the other two partners if it plans free trade talks with a “non-market” economy. As a result, it may give the other USMCA partners the ability to influence the text of such a new free trade deal.
2018 Grain Markets, Crop by Crop
Overall, like we said in our last FarmLead Breakfast Brief of 2018, going forward, grain prices will likely influenced the most by continued geopolitical risk. For the likes of corn, soybean, wheat, and canola, be cautious of hoping for prices to keep going higher and sell into those rallies; after all, there’s a healthy amount of supply for all of these crops still available at home and around the rest of the world.
Looking at general grain markets performance, we can turn to the S&P Index which showed a negative return of 3.67% for the 2018 calendar year.
There were some other crops though, who on the futures market performed relatively well. This includes Chicago wheat (who was the best performer out of all grain markets participants), gaining nearly 20% in 2018. Something to keep in mind, the gains would’ve been even higher had it not been for the broader sell-off across all markets the last week of trading in 2018.
To dig into a few of the specific crops, check our FarmLead Insights page or the individual links at below for all the 2018 recaps of specific crops.
- 2018 Wheat Prices, Market Recap
- 2018 Barley Prices, Market Recap
- 2018 Oats Prices, Market Recap
- 2018 Flax Prices, Market Recap
- 2018 Lentil Prices, Market Recap
- 2018 Pea Prices, Market Recap
- 2018 Chickpea Prices, Market Recap
Then watch the FarmLead Insights page the first week of January for our outlook on 2019 grain markets and specific crops!
FarmLead – North America’s Grain Marketplace