JP Morgan Calls U.S. Ag Fundamentals “Rapidly Deteriorating”

JPMorgan analyst says American farmers are off to a slow start in 2019/20. ( FJ )

America’s largest bank says U.S. agriculture faces a three-pronged crisis. JPMorgan analyst Ann Duignan sent a note to investors yesterday calling the fundamentals of agriculture “rapidly deteriorating.”

The three-pronged crisis of declining exports, a poor crop of corn and soybeans and the trade war with China, have created “a perfect storm for U.S. farmers,” Duignan says. Besides tariffs, Chinese import demand for soybeans will likely decline due to the approximate 30% loss of its hog herd after the outbreak of African swine fever (ASF).

Duignan also noted Brazil and Argentina have produced a near record soybean and corn yield, while the U.S. dollar strength remains a headwind for global trade.

“As a result of tariffs and excess global supply, US soybean export inspections are down 27%” year over year, Duignan said. She added that, at the same time, South America is having a banner year for production so “the export market is growing ever more competitive.”

Domestically, “the Midwest is off to a very slow start in 2019/20,” Duignan said. The planting season is “off to a bad start,” and corn and soybean crops are far behind in “planting progress” compared with last year, she said.

J.P. Morgan Chase & Co. is an American multinational investment bank and financial services company headquartered in New York City. JPMorgan is the sixth largest bank in the world with total assets in 2018 of $2.53 trillion.