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Weather market continues

By Staff | Jul 26, 2019

Treasury Secretary Steven Mnuchin told reporters U.S. and Chinese officials will have another “principal-level” phone call this week. This is the second time that negotiators have spoken since the two presidents agreed to restart discussions.

If all goes well with the call, Mnuchin says he may travel to Beijing for trade talks as well as U.S. Trade Representative Robert Lighthizer. However, negotiations with China continue to be going nowhere according to several sources.

President Trump stated this week that, “we have a long way to go as far as tariffs with China are concerned.” This is after President Trump stated last week that China has let the U.S. down by not buying more agricultural products, after China had agreed to buy substantial amounts of U.S. agricultural products following the G20 Summit. He also reiterated earlier statements that another $325 billion in tariffs can be applied if demands aren’t met.

The U.S. Customs and Border Protection Agency stated they have raised $20.8 billion on Chinese tariffs thus far. The White House has committed to pay U.S. farmers $28 billion for the negative impact from the on-going trade war with China.

Corn and soybean conditions

Corn condition ratings went against expectations and improved one point on the week at 58 percent good/excellent.

As expected with delayed planting, silking is lagging behind the average by 25 percent at 17 percent silked.

Beans also went against expectations and improved 1 percent to 54 percent good/excellent. As with corn, bean maturing is lagging with delayed planting. Emergence is only 4 percent behind average now, but blooming lags 27 percent behind average at 22 percent. Some of the states predominate for production in the Corn Belt are under 45 percent good/excellent for both corn and soybeans.

Weather moves the market

Weather continues to be a market mover. Last week the markets looked at the warmer and drier forecasts with excessive heat and it created concerns on crop conditions.

This week with crop ratings increasing a percent for both corn and soybeans overall and scattered showers in the forecast throughout the Corn Belt has helped ease some of the weather concerns. Forecasts for the next 7 days are showing higher probability of rain for the remainder of the week and into early next week. Extended forecasts are divided with higher temperatures expected in the western areas and cooler in the east. The latest run is showing only scattered showers are expected but the 11-15 day forecasts brining rain back. The markets will continue to watch the weather until the August report.

Some of the focus in the trade this week were headlines that the USDA’s Risk Management Agency has a running total as of early July of 12.5 million crop acres in prevented plant. Of this total, 7 to 8 million acres are thought to be from corn and soybeans are estimated 2 to 3 million. This data isn’t an official release but goes along with an earlier statement from Undersecretary Bill Northey that prevent planting acres will likely be over 10 million this year.

Exports continue to be a topic in the trade due to weather, trade disputes and higher commodity prices. Brazil unseated the U.S. as the world’s top shipper of soybeans and Russia has moved into the status of the world’s largest wheat exporter. As the world’s largest corn exporter, there is talk that the U.S. corn exports could fall 14 percent in 2018-19 according to the Department of Ag. This could open the door for the next largest suppliers in line, Brazil and Argentina. As they could export 70 MMT, which would be 47 percent higher than the prior season.

For more information, you may contact Kristi Guse at (712)-260-6486, or e-mail at kguse@maxyieldgrain.com. The opinions and views expressed in this commentary are solely those of Kristi Guse. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.

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