Another day, another geopolitical crisis for the markets. Today, wheat prices cratered alongside the broader equity and commodity markets thanks to increasing worries about the Turkish economy. A week after the U.S. announced new sanctions against the NATO member, the nation’s President Recep Tayyip Ergodan announced tariffs on more than 20 U.S. products.
Turkey has tripled the import taxes on products like automobiles, nuts, and spirits while increasing duties on rice, beauty products, and certain paper products by more than 100%. The news came at a time that the U.S. dollar is sitting just below a 13-month high, and U.S. oil prices finished the day off more than 3%.
Here’s what else you need to know about why wheat prices and other commodity prices slumped in Chicago on Wednesday.
Wheat Prices Retreat
In Chicago, December SRW prices shed 9.5 cents to close just under $5.52 per bushel. The March 2019 contract shed 8.5 cents end closed a tick above $5.74 per bushel.
In Kansas City, December wheat prices fell 9.75 cents to close just under $5.63 per bushel.
In Minneapolis, December spring wheat contracts closed the day off 12.5 cents to finish just under $6.01.
Tomorrow, the USDA will release its weekly export update. The USDA export report is expected to show sales of wheat ranging between 7.3 million and 18.4 million bushels, according to analysts estimates. The report comes shortly after the USDA announced that July grain export prices came in at a six-year low.
Meanwhile, as Brennan noted this morning in the Breakfast Brief, dry conditions in Australia continue to pummel the nation’s wheat crop. Last Friday, he said that Australian wheat production for 2018/19 crop year will hit 22 MMT. Exports are pegged at around 16 MMT. The Wall Street Journal reported that “a region more than twice the size of Texas is in the grip of a drought that’s lasted six years and shows no signs of abating.” 
Soybean Prices Slump Again
It was another bad day in the bean complex as Turkish uncertainty offered a fresh reminder of the ongoing trade spat between the United States and China. The November soybean contract slumped 10.75 cents to close at $8.69 per bushel. The January 2019 contract slumped 10.75 cents to close at $8.81 per bushel.
The downturn came despite news that the July crush was the second largest amount ever at 167.733 million bushels. This figure blew away average trade expectations of 161.745 million bushels and exceeded last year’s crush by roughly 16%.
In addition to a stronger dollar, news from Brazil weighed on soybean prices today. On Wednesday, consultancy Celeres forecasted that Brazil’s soybean acreage will increase by 3.1% in 2018/19. With 89.45 million acres in the rotation, Celeres says that the country’s production will hit 119.6 MMT.
That figure is 900,000 MT lower than the USDA’s most recent projection.
Tomorrow’s USDA export report is expected to project soybean sales between 14.7 million bushels and 40.4 million bushels.
Corn Prices Dip on the Day
Corn prices saw a decline on the day as well. The December corn contract shed 0.75 cents to end the day at $3.76 per bushel. The March 2019 contract closed just under $3.88 after slipping 0.25 cents on the day.
Today, the USDA reported a private export sale of roughly 114,500 MT split almost evenly between old crop and new crop. That corn is set for unknown destinations.
The Energy Information Administration, meanwhile, announced that daily production of U.S. ethanol came in at 1.072 million barrels.
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