March 23: Grain Prices Rebound from Trump Tariff Tantrum

Grain prices were mixed Friday as markets digested the latest speculation on a trade war between the United States and China. Meanwhile, traders kept a close eye on weather reports across the U.S. Plains and South America. Ongoing drought in both regions continues to provide support to grain prices ahead of next week’s Prospective Plantings report.

Here’s our daily recap from the Chicago Board of Trade.

Wheat Prices Whip Higher

Wheat prices pushed higher thanks to drought concerns across the U.S Plains and a stronger-than-expected export report from the USDA on Friday. This morning, the USDA reported wheat export sales of a little more than 265,000 MT for the week ending March 15. That figure was a 63% jump from last week, but still fell short of last year’s sales figure by almost 37%.

May SRW wheat prices added 4.5 cents Friday to close a tick above $4.6025.

June SRW wheat prices gained 4.5 cents to close the day at $4.765.

In Kansas City, HRW prices gained 8.25 for the May and July contracts to close at $4.7925 and $4.9825, respectively.

MGEX spring wheat contracts for May added 9 cents and closed back above $6.00. The July contract gained 7 cents to end the day at $6.085.

Looking ahead, it appears that rain won’t appear much in Kansas. That’s bad news for a state that continues to watch the quality of its winter wheat crop erode with each passing week.

Corn Ticks Higher on Argentina Drought

Despite a lackluster export sales report from the USDA Friday, corn prices found gains on reduced expectations for the Argentine crop.

May corn contracts added 1.25 cents to close a tick above $3.77. The July contract gained 1.5 cents to end the day just under $3.86 per bushel.

The USDA reported weekly (ending March 15) sales of 1.47 MMT for old crop. That was a 41% drop from the previous week’s blowout figure. Still, this export number topped last year’s weekly report by about 21.5%. South Korea has been stepping up its purchases, adding almost 450,000 MT for the week. Japan was second at a little more than 263,000 MT.

The bigger news came out of Argentina. Today, the Buenos Aires Grain Exchange slashed its domestic outlook for corn production by 2 MMT to 32 MMT. This news comes not long after Rabobank cut its Argentine forecast to 33 MMT.

Ongoing dryness has parched Argentina’s landscape as the nation faces its worst drought conditions in 100 years.

Soybean Prices Rebound from Tariff Tantrum

Soybean prices rebounded from an early selloff fueled by the tariff tantrum.

May contracts shed a modest 1.5 cents and closed just above $10.28. The July contract also dipped 1.5 cents to close the day at $10.3925.

Bargain buyers stepped up purchases today after contracts dipped by more than 10 cents in early trading. The mainstream press is all whipped up about the potential for a trade war between the United States and China.

China has threatened U.S. soybean restrictions as retaliation against President Donald Trump’s new tariffs responding to intellectual property theft. China listed $3 billion in tariffs on

However, many voices in the press have failed to dig into the numbers to understand the reality of the situation.

China’s import demand in 2018/19 is expected to rise above 100 MMT. Given Argentina’s ongoing drought and Brazil’s export limitations, China isn’t going to secure all of its required soybeans from South America. Though they may secure soybeans from Canada, rapeseed from the EU, and other crops from smaller producers, a large deficit will still likely exist. Meanwhile, so long as U.S. export groups move to fill needed demand elsewhere (global demand is not falling), U.S. soybean exports can still remain robust.

Today, the USDA announced that export sales for the week ending March 15 came in on the lower end of trade expectations. The USDA reported sales of a little more than 759,000 MT. That figure was a 40% drop from last week.

Down in South America, the Buenos Aires Grain Exchange cut its soybean production outlook for Argentina. The BAGE cut 2.5 MMT to hit 39.5 MMT.

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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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