March 22: Soybean Prices Mixed as Markets Eye Trump Tariffs

Grain prices were volatile with the broader U.S. markets as traders weighed the probability of more Trump tariffs on trade. The President slapped up to $60 billion in new tariffs on Chinese goods Thursday.

Trump’s administration said that the tariffs are in response to China’s violations of U.S. intellectual property rights.

In response, a state-run newspaper in China called for the nation’s government to stop U.S. dumping of soybeans in their market. This was the same tactic that China used to dry up imports of sorghum earlier this year.

Meanwhile, in Washington, Congress passed a $1.3 trillion bill to keep the U.S. government funded through September 30, 2018. It’s just another can being kicked down the road for American taxpayers.

Soybean Prices Mixed as Trump Tariffs Loom 

Today, the USDA was slated to release its weekly update on export sales. However, the agency delayed until Friday morning. Ahead of the report,

May soybean prices were flat just under $10.30, while July contracts gained 0.25 cents to close at $10.4075.

The Prospective Plantings report will come out on March 29, and traders are eyeing it with a lot of interest. Ahead of those numbers, analysts have been releasing their expectations. Today, Informa Economics projected that total soybean acreage would come in at 91.5 million acres.

That number is 1.5 million acres higher than the USDA’s current expectation. However, it’s about 500,000 acres lower than the results from last week’s release of the Allendale Survey.

Commodity Weather Group reports that Argentina’s soybean crop is under remarkable stress. The group reported that roughly two-thirds of the nation’s corn and soybean regions are facing significant drought and stress.

The drought is having a sharp impact on expectations for global soybean stocks (in addition to rising Chinese demand.)

Today, the International Grains Council projected that global ending stocks for “milled beans” in 2017/18 would come in at 42 MMT. That number is about a 3 MMT reduction from its previous projection. Though this number doesn’t provide a complete picture of the international market (the USDA pegged 2017/18 ending stocks at 94.4 MMT in March), it does offer a glimpse into why analysts project declining inventory levels.

The IGC projects that Chinese demand will accelerate global trade (even in the face of a possible standoff between the U.S. and China.) The IGC projects that consumption will press higher, with key exporters seeing a contraction in supply. Those factors are part of the narrative that saw the U.S. cut its ending stocks figure in March to 94.4 MMT from 98.14 MMT the previous month.

Corn Prices Find Gains on Argentina Woes

Corn prices saw small gains after analysts in Argentina slashed expectations for the nation’s crop.

The Buenos Aires Grain Exchange cut its projection from to 34.01 MMT to 32.00 MMT. Drought continues to plague the country. May corn prices added 1 cent to close at $3.76 per bushel. The July contract added 1.25 cents to close a tick above $3.84.

Corn traders reacted to yesterday’s news that American ethanol stocks have retreated from their record levels. Ethanol stocks fell from a record 24.281 million barrels to 23.758 million barrels for the week ending March 16, according to the Energy Information Administration.

Informa Economics weighed in on U.S. corn acreage ahead of next week’s planting report. Analysts cut their estimate by 279,000 acres to 88.9 million acres.

As I’ve noted in GrainCents, 2018 will not be the year of “King Corn.” Farmers are instead planting soybeans, and they don’t seem all that concerned about potential restrictions to the Chinese market.

Changes in production and demand are having a profound impact on expectations for global stocks at the end of the 2017/18 calendar. Today, the International Grains Council projected that total international grain stocks slump in 2018/19, with corn as the main reason for the decline.

First, the IGC slashed its projection for ending stocks by 6 MMT to 308 MMT. Then it took a sharp ax to ending stocks for the 2018/19 calendar. The IGC projects that total stocks will come in at 265 MMT. That figure is down about 43 MMT year-over-year due to large reductions in production in the United States and China. [1]

As I noted, the USDA has delayed its export sales report until Friday.

Trade estimates for tomorrow range from 1.4 MMT to 2.1 MMT for old crop sales. New crop estimates range from 100,000 MT to 200,000 MT. 

Dry Weather Offers Wheat Support

Wildfires have become a severe threat to the Southern Plains, leaving farmers on high alert in southern Kansas, and the Oklahoma and Texas panhandles.

May SRW wheat prices added 2.25 cents to close the day just under $4.56. The July contract added 2.75 cents to close the day at $4.72 per bushel.

In Kansas City, HRW contracts for May added 5.5 cents to close trading at $4.71. The July contract gained 6.25 cents to finish at $4.90 per bushel.

In Minneapolis, spring wheat prices for May gained 3.75 cents and closed at $5.93. MGEX spring wheat contracts for July added 2.75 cents and ended at $6.015.

Japan dove back into the wheat market today. The country purchased a little more than 127,000 MT from Canada and the U.S. About three-quarters of that purchase originated from the U.S.

The International Grains Council offered their outlook on stocks for both 2017/18 and 2018/19. The group projected that ending stocks for the current year would increase by 2 MMT to 256 MMT due to the uptick in global production (Thanks a lot, Russia.).

The IGC said that ending stocks for the new year would come in about 3 MMT lower at 253 MMT.

However, we’re well aware that the IGC will have to adjust these numbers due to Russia’s never-ending pursuit of dominance in the low-quality wheat export market.

Tomorrow’s weekly export sales will generate a lot of buzz.

Carving through analysts’ expectations, export sales range from 100,000 MT to 300,000 MT for the week ending March 15.

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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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