May 29 – Grain Prices Fall After Trump Imposes Tariffs on China

A brutal day on Wall Street helped boost the U.S. dollar higher as political crises rattled both Italy and Spain. Meanwhile, grain prices reacted negatively to news that the Trump administration plans to proceed with tariffs on about $50 billion of Chinese imports. Grain prices slumped in response.

Markets are also looking for cooler temperatures and some rains across the Midwest this week. Those rains are likely to provide an already healthy crop with more drink.

Let’s dive into the other events happening today at the Chicago Board of Trade.

Wheat Leads Grain Prices Lower

SRW July wheat prices fell 6.5 cents to close the day at $5.365. The September 2018 contract shed 6.25 cents to end the day a tick under $5.54 per bushel.

Down in Kansas City, HRW wheat prices didn’t fare any better. July and September 2018 contracts shed 7.5 cents and 8.0 cents, respectively. The July contract is now trading at $5.565, while the next-month contract is sitting at $5.745.

Today, the USDA reported weekly export inspections at 431,239 MT. That was a 23.4% jump from the previous week. However, it was also a 28% drop from last year.

The USDA said that 73% of the winter wheat crop is headed. That’s two points back of the five-year average of 75%. It’s six points back of the report in 2017.

On the crop condition side, the US winter wheat crop showed some improvement from the previous week’s report. The USDA says that winter wheat rated “good-to-excellent” came in at 38%. That’s a 2-point jump from the week ending May 20.

US Winter Wheat Crop Condition

But we’re still well behind last year’s crop, which sat at 50% G-E.

Meanwhile, the amount of crop rated poor-to-very poor fell another percentage point from last week to 34%.

Meanwhile, spring wheat prices plunged on Tuesday by more than 2%.

The July MGEX contract fell 16.25 cents to end the day at $6.28. The September contract fell another 13 cents to close the day a tick below 13 cents.

This afternoon, the USDA reported that 91% of spring wheat has been planted. That figure is two points ahead of the five-year average, but still 4 points back of this time in 2017.

US Spring Wheat Planting Progress

Soybean Prices Slide on China Fears

In Chicago, July soybean prices shed 11.0 cents to close the day at $10.305. The August contract shed 11.0 cents to close a tick under $10.35.

Soybean prices took a hit as markets reacted negatively to news out of Washington. The Trump administration announced it will slap a 25% tariff on about $50 billion in Chinese goods. That decision comes a week after both sides announced plans to avoid a trade war.

But it also comes a week before U.S. Trade Secretary Wilbur Ross visits China to lead negotiations on a bilateral deal. This could be posturing ahead of the event, but some traders were taking no chances and took some profits off the table.

Today’s USDA progress report showed that 77% of the soybean plant has gone into the ground. We’re 15 points ahead of the five-year average. We’re also 12 points ahead of the 65% figure from the same period last year.

US Soybean Planting Progress

The progress report indicates that 47% of the soybean crop has emerged. That figure is a 15-point advantage over the five-year average of 32%.

Corn Prices Follow Grain Prices Lower

July corn prices continued to hold at $4.00 per bushel, despite the 6-cent decline on the day. September 2018 corn contracts are trading at $4.09 after falling 6.0 cents on the day.

This afternoon, the USDA reported crop progress in its weekly report. The USDA says that farmers have put 92% of corn into the ground. That’s ahead of the 5-year average of 90%.  

The chart below provides a glimpse of corn progress in the top producing states.

US Corn Crop Condition

However, that figure is a point behind what analysts had projected.

Meanwhile, the USDA says that 72% of corn has emerged in the United States. That figure was a 22 point jump from the previous week. It’s also three points ahead of the five-year average.

The USDA says that 79% of the corn for the week ending May 27 is rated good-to-excellent. That’s well above the 65% G-E rating at the same time last year. Reports of two-foot-tall corn are already spinning across the Midwest. Given that farmers planted fewer acres this year, we’re looking for a strong crop and a strong price.

This morning, the USDA offered its latest update on grain inspections. The USDA said that inspections for corn came in at 1.705 MMT. That figure is a 10% jump from the previous week.

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About the Author
Garrett Baldwin

Garrett Baldwin is a content strategist and editor at FarmLead. He covers the global grain markets and public policy issues related to the agricultural industry. He is a graduate of the Medill School of Journalism at Northwestern University. He also holds a Master’s Degree in Economic Policy from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University, and an MBA in Finance from Indiana University.

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