A new report from Rabobank shows an increased chance of four-dollar corn this growing season. As 2018 corn planting is underway, the report shows key risks are developing that can drive price volatility and potentially sustain elevated grain prices through the 2018/19 season. The report explains that while demand is staying firm, the projected corn acres and current global corn stocks are declining compared to the past few years. The report notes that this environment provides little room for production deterioration in the 2018 growing season. Any additional loss of production through acreage or yield loss will put pressure on corn prices. The Rabobank Pricing Probability model forecasts that there is now over a 50 percent probability that futures prices will remain near to or exceed $4 per bushel through December, and 2018/19 corn has a 24 percent chance of sustaining greater than $4.70 per bushel.

The latest measure of producer mindset dipped lower in April. The Purdue/CME Group Ag Economy Barometer fell to 125 last month, which was ten points lower than a month earlier and 15 points below its February reading. Organizers say the sharp drop in the ag producer sentiment index was attributable to producers’ weakening perceptions of current conditions in the production agriculture sector, along with a decline in their expectations for future economic conditions. Respondents indicated they are becoming more pessimistic about agricultural trade, citing the declining price expectations for soybeans. Soybean prices are particularly vulnerable to disruptions in trade with China, as China’s share of U.S. soybean exports is approximately 30 percent. The monthly index surveys 400 producers from across the United States. A measure greater than 100 indicates positive sentiment by producers regarding the ag economy, while a measure under 100 suggests the opposite.

Trade war concerns continue to drive a sharp decline in producer sentiment toward the agricultural economy, according to the Purdue University/CME Group Ag Economy Barometer. The April barometer reading of 125 was 10 points lower than a month earlier and 15 points below the February reading. The barometer which is based on a monthly survey of 400 agricultural producers from across the country, shows that the drop in producer sentiment was driven by declines in both the Index of Current Conditions, which fell 11 points to 123, and the Index of Future Expectations, which fell 9 points to 126. The Index of Current Conditions was at its lowest level since May 2017, while the Ag Economy Barometer and the Index of Future Expectations were at their lowest levels since March 2017. Producers’ weakening perceptions of current conditions in the production agriculture sector, along with a decline in their expectations for future economic conditions, were the main drivers of the barometer’s overall decline, said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “There seems to be a spillover effect that is driving concern among agricultural producers,” Mintert said. “Negative perceptions about exports spill over into lower expectations for commodity prices, and then that changes producers’ views about farmland prices.” The trade dispute with China continues to be an area of concern. The biggest issue is the possible impact on U.S. soybean exports, 30 percent of which go to China. A majority of producers said they expect a sharp decline in the November soybean futures contract price, possibly to below breakeven.

The Environmental Protection Agency has granted an undisclosed waiver to CVR, a refinery owned by Carl Icahn, allowing the company to bypass its biofuel obligations under the Renewable Fuel Standard. The move, which is one of several, has angered the ethanol industry. Growth Energy CEO Emily Skor points out the political ties between the Trump Administration and Icahn, as “Icahn interviewed Scott Pruitt for the job.” EPA administrator Pruitt told reporters last week that the EPA is following statute regarding RFS waivers. But, the move to grant a waiver to CVR means “Icahn stands to make millions more from an EPA handout,” according to Growth Energy. Icahn has been under the microscope since the beginnings of the Trump administration. While serving as an unpaid advisor to President Donald Trump, Icahn submitted a proposal to change the point of blending under the RFS away from refiners and further down the supply chain.

Negotiations for revamping the North American Free Trade Agreement will continue next week as all sides remain hopeful to reach a deal this month. Top-level talks, according to reports, will continue after a U.S. trade delegation returns from China. U.S. officials and negotiators from Canada and Mexico have been eying an early May finish line, and in mid-April, Vice President Mike Pence said it was a “real possibility” an agreement could be reached in the next several weeks. However, just between Canada and the U.S., issues like dairy, dispute-resolution mechanisms, a proposed five-year sunset clause, and intellectual property remain unresolved, according to The Canadian Press. Still, all sides appear positive an agreement will be reached soon.

The Trans-Pacific Partnership continues to move forward without the United States. Mexico last week ratified the new TPP agreement, now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Mexico’s Senate voted 73-24 to approve the agreement which will go into effect when six of the 11 nations approve the deal. President Trump earlier this month directed U.S. Trade Representative Robert Lighthizer and National Economic Council Director Larry Kudlow to consider rejoining the TPP, but he later voiced his preference for a bilateral trade agreement with Japan rather than the TPP agreement. Meanwhile, Japan will visit with Thailand as Thailand hopes to join the new TPP, a move Japan predicts would pressure the United States to again consider rejoining the pact. The National Pork Producers Council points out that Japan is the top pork export market for the United States. Further, the Trans-Pacific Partnership was expected to add $4 billion worth of U.S. ag exports to the ag economy.