March 23 – Grain Prices Sit in Shadow of Trade War

Good Morning!

Grain prices are all taking a heavy hit this morning as the grain market deals with effects of a trade war between China and America.

“Character is like a tree and reputation like a shadow. The shadow is what we think of it; the tree is the real thing.” – Abraham Lincoln (16th President of the United States)

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Grain Prices Sit in Shadow of Trade War

Grain prices are all taking a heavy hit this morning as the grain market deals with effects of a trade war between China and America. Given the threats lobbed back and forth, the markets are taking a more subdued approach to where all the chips land on this one.

Canola prices are down with soybeans but also taking some lower hits for two other reasons. First, palm oil production has been strong thus far this month in major producing areas. Second, canola crush plants in Western Canada have slowed down production because of lack of rail service. [1] Just by the numbers, every day that a plant is down, it’s about a $1.8 million loss in production.

Wheat prices remain pressured with rain falling in the US Southern Plains, and with more in the forecast. [2] Winter wheat crop conditions in the Black Sea remain relatively positive with soil moisture health across the region.

On Thursday, March 29, we will get the USDA’s Planting Intentions report. Yesterday, Informa came out with their estimates, forecasting 91.5 million acres of soybeans and 88.9 million acres of corn.

Grain Prices Forgetting Argentina is Dry?

The Buenos Aires Grain Exchange (BAGE) reported this week that 80% of the Argentine soybean crop was rated poor or very poor. Usually, you see that sort of rating for the good-to-excellent column! The reason for the switch around is that 90% of Argentina’s soybean fields see soil moisture levels categorized in the two lowest categories: poor or dry.

With this sort of rating downgrade, the BAGE dropped their estimate of the Argentine soybean harvest to 39.5 million tonnes. This is down 2.5 million tonnes from their previous estimate. AgResource is now suggesting that the final number could come in closer to 35 million tonnes.

As for moisture going forward, Argentina is expected to get some, but it’s unlikely to make too much of a difference to yield potential on this crop and will likely only help the wheat crop that will be planted in a few weeks. Northern Argentina will get some heavy but isolated rains this weekend while the rest of the country sees scattered showers next week. In the first week of April, dryness will return.

Steady rain is expected to continue to fall across much of Brazil, although the far eastern areas of the Brazilian corn belt are looking a bit drier over the next week. That being said, soil moisture conditions are more than healthy for the second corn crop’s early development.

Brewing a China-America Trade War

Yesterday, President Trump announced that America would be putting tariffs on about $50 Billion worth of Chinese imports. [3] This is the result of a seven-month investigation into intellectual property theft, often contentious issues between the two world superpowers.

China wasn’t going to be pushed around though! They announced their list of things that they might start taxing soon. [4] The list was $3 Billion worth of American goods that get imported into China, including steel, apples, and pork. [5] It’s been speculated for the past month now that import taxes on soybeans are in China’s gunsights as well, but there’s nothing been done yet. The American agriculture industry is, however, the easiest target for China to go after. [6]

The editors of Bloomberg think that America’s tariffs on Chinese goods will only have an impact on the average American taxpayer. [7] They argue that, regardless of the taxes, American consumers will continue to buy “Made in China” products because there are no better (or cheaper) substitutes. Thus, President Trump keeps the spotlight, and the American taxpayer is left sulking in the shadows.

Have a good weekend!

To growth,

Brennan Turner

President | CEO
FarmLead
TF: 1-855-332-7653
contact@FarmLead.com
@FarmLead or @GrainCents on Twitter

 

At 7:30 AM CST in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.2922
 CAD, $1 CAD = $0.7739 USD)

May Corn: -4.5¢ (-1.20%) to $3.715 USD or $4.800 CAD
May Soybeans: -11.0¢ (-1.07%) to $10.188 USD or $13.164 CAD
May Soybean Meal (per short ton): -$3.70 (-1.01%) to $364.30 USD or $470.745 CAD
May Soybean Oil (cents per lbs): -0.3¢ (-0.88%) at 31.6¢ USD or 40.8¢ CAD  
May Oats: -1.5¢ (-0.66%) to $2.273 USD or $2.937 CAD
May Wheat (Chicago): -7.5¢ (-1.65%) to $4.483 USD or $5.792 CAD
May Wheat (Kansas City): -4.8¢ (-1.01%) to $4.665 USD or $6.028 CAD
May Wheat (Minneapolis): -3.5¢ (-0.59%) to $5.895 USD or $7.617 CAD
May Canola: -$0.70 (-0.13%) to $11.757/bu / $518.40/MT CAD or $9.099/bu / $401.179/MT USD

COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.

About the Author
Brennan Turner

Brennan Turner is the CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.

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