Farm Progress

Trump seeks additional tariffs, futures mixed after USDA report and take a Deep Dive into USDA data.

Compiled by staff

July 14, 2018

6 Min Read
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Missed some market news this week? Here’s a look back.

Monday, July 9, 2018

Friday’s big rally in soybeans didn’t carry over into trading overnight, with futures giving back some of those gains. While tariffs were the issue last week, traders are taking a look at weather and yield potential today as the corn crop pollinates. Hotter temperatures this week should give way to cooler and wetter weather across much of the Corn Belt, where yield potential remains good. 

It was another mixed week for grain export inspections for the week ending July 5 – notable for wrapping up a day after the Independence Day holiday and a day before the latest U.S.-China tariffs were enacted. All things considered, corn export inspections came in strong, while soybeans fared decently and wheat sputtered. 

The latest Crop Progress report could show deteriorating conditions for corn and soybeans. At least that’s the opinion of growers reporting Feedback From The Field last week. 

The latest USDA Crop Progress report shows this year’s 2018 corn crop quality slipping for a second consecutive week, while soybean condition remains unchanged from the prior week. Winter wheat harvest moves another 12% closer to completion. 

The trade dispute between the U.S. and China continues to roil markets, but big speculators weren’t pressing the downside aggressive in soybeans ahead of tariffs that took effect Friday. Here’s what funds were up to through Tuesday, July 3, when the CFTC collected data for its latest Commitment of Traders. The date came out Monday due to the Independence Day holiday. 

Tuesday, July 10, 2018

Grain prices are in the red again this morning on the heels of Monday’s losses that took the steam out of a brief attempt to rally. Selling came despite a drop in corn ratings because the crop appears to be pollinating under mostly non-threatening weather. Soybeans have another month of uncertainty, at least as far as weather is concerned. That has soybean futures trying to move off lows after overall conditions slipped this week despite a steady reading in the percentage of the crop considered good to excellent. 

Export sales, export inspections, export shipments, cancellations – understanding the nuances of this USDA data can be daunting sometimes. But understanding both the data and the overarching trends surrounding it is an integral part to a holistic grain marketing plan. Listen as Farm Futures senior grain market analyst Bryce Knorr walks through some historical context behind these reports and learn how to better put them to work for you.

 Wednesday, July 11, 2018

Tariffs are back in the news and not in a good way for the market. The Trump administration is seeking $200 billion in additional tariffs on Chinese imports, and though the new duties won’t take effect for two months they had an immediate impact on already beleaguered futures. While soybeans held contract lows, corn slipped to another new low as the crop pollinates without lack of a series weather threat. 

Thursday, July 12, 2018

The market has given its assessment of how Chinese tariffs will affect U.S. soybean prices – futures are down some $2.50 from spring highs. USDA weighs in with its judgement today, when the monthly production, supply and demand report is issued at 11 a.m. CST. Ahead of those numbers China says it will import 2% fewer soybeans in the upcoming marketing year.

Grain futures turned mixed after a report from USDA that slashed forecasts of corn carryout but raised soybean ending stocks due to the impact of Chinese tariffs.

Growers reporting Feedback From The Field this week rated crops from excellent to very poor, citing a variety of conditions.

Friday, July 13, 2018

Futures markets are giving back some of yesterday’s gains today, at least in the corn and soybean market as lack of a weather threat and uncertainty over exports triggered selling. Wheat is trying to extend its gains due to lower production around the world that could boost prices and export hopes. 

Grain futures are mixed this morning but fading yesterday’s gains as the reality of uncertainty exports and large supplies reasserted a negative mood. Hopes the U.S. and China could begin talking trade boosted markets Thursday, helping stocks post big gains on Wall Street. The dollar is higher again today, further limited enthusiasm for commodities. Gold is lower and crude oil is fighting to stay above $70 a barrel. 

The latest USDA World Agricultural Supply and Demand Estimates report, out Thursday, handed out double digit gains in some wheat contracts, plus some more modest boosts for corn and soybean futures yesterday. Wheat prices extended that rally into Friday, but corn and soybean prices reversed lower due to overriding trade and weather worries.

While money managers braced for the worst in the wake of the U.S.-China trade dispute, they weren’t aggressively selling their holdings this week. The exception was corn, which big speculators targeted for liquidation. Here’s what funds were up to through July 10, when the CFTC collected data for its latest Commitment of Traders.

Market outlooks

Basis Outlook— Despite soft basis for corn and soybeans last week and regular deliveries, bids for both crops weakened less than the roll out of July futures. While low prices and generally below average basis discouraged farmer selling, demand also supported the cash market despite uncertainty over the developing trade war between the U.S. and China. 

Fertilizer Outlook– The retail fertilizer market appeared to take the Independence Day holiday week off, with few price changes showing up during a slow season for applications. But growers trying to book products for 2019 crops likely face higher costs thanks to a global market that’s firmed over the past two months. 

Soybean Outlook- In early July before China’s tariffs on soybeans went into effect I wrote that hoping for a rally was akin to drawing to an inside straight or pulling a rabbit out of a hat. Indeed, the aftermath of the first weeks of the trade war shows beans’ hand a bust, with no magic to stop the steady drop in prices. 

Corn Outlook- It’s tempting to blame the corn market’s troubles on the trade dispute between the U.S. and China. But even without that noise, prices might be struggling. The crop is pollinating without an obvious weather threat. To be sure, there are some trouble spots. The Palmer stress index flashed warning signs statewide in June from too much rain in Iowa and Indiana. Other states from Missouri to Michigan have dry conditions that are worrying farmers too.

Wheat Outlook- In a world without noise, the wheat market would be ready to rally. Even in today’s climate filled with trade war fears, futures are showing the strength we’ve expected for a while. Whether this rally will last or fall victim to the same type of selling seen before is the make-or-break question, and likely not only for wheat.

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