The first few weeks of the new Trump administration have not failed to disappoint. In the commodity space, the blunt force of tariff threats had the desired effect with the quick submission of the Governments of Canada and Mexico on the issue of border security. The end result has seen commodity markets rebound as the threat of a global trade dispute has receded…for now. Both countries have been given a 30-day reprieve to implement the measures required to assure the White House that the issues of illegal immigration and fentanyl trafficking are being taken seriously.
Ultimately however, the threat of tariffs has not gone away. China retaliated to the US tariffs and implemented their own 15% tariffs on some US goods including coal and LNG while also limiting export of rare minerals used in the making of high-tech electronics. The environment for trading has become increasingly volatile.
Better rainfall prospects for Argentina have seen corn and bean prices weaker. Brazil is way behind on its soybean harvest due to untimely rains. The market is trying to make a story that this will delay the safrinha (second) corn crop planting. However, I’m sure that the Brazilian farmer would prefer to be sowing into the wet ground a week or two late and take a small penalty. We also know that when they get an opening in harvest weather, they’ll be able to cover an enormous amount of ground very quickly.
China comes back from its New Year celebrations this week. There is an air of anticipation that this will herald a wave of buying as the world’s biggest market comes back online. The Middle East and East African nations have done some Aussie business in the past week as the Black Sea origins become harder to source. Australia is well placed to price in demand into SE Asia and will need to ship huge volumes quickly to avoid the Northern Hemisphere new crop in June/July.
After an Arctic blast settled over the US last week (snow in Florida has to be a rarity), there are some fears that there has been as much as 15% winter kill on exposed wheat. This will be hard to quantify until the crop breaks dormancy in March/April. It has helped to build some risk premium into CBOT wheat. Similarly, the wheat crop in Russia remains vulnerable. Temperatures appear to be holding above critical levels for the time but remain exposed without appropriate snow cover. Dry conditions prevail which will become more of an issue as Spring develops.
Next week
The chaotic nature of US politics continues to create volatility. At a fundamental level, the weather market and annual ‘fight-for-acres’ season will soon be upon us. Fingers crossed for some good pricing opportunities ahead.
The United States Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) Report was released on Friday, showing a tightening trend across wheat
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Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
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Trump wielding tariffs like a conductor’s baton
Ultimately however, the threat of tariffs has not gone away. China retaliated to the US tariffs and implemented their own 15% tariffs on some US goods including coal and LNG while also limiting export of rare minerals used in the making of high-tech electronics. The environment for trading has become increasingly volatile.
Better rainfall prospects for Argentina have seen corn and bean prices weaker. Brazil is way behind on its soybean harvest due to untimely rains. The market is trying to make a story that this will delay the safrinha (second) corn crop planting. However, I’m sure that the Brazilian farmer would prefer to be sowing into the wet ground a week or two late and take a small penalty. We also know that when they get an opening in harvest weather, they’ll be able to cover an enormous amount of ground very quickly.
China comes back from its New Year celebrations this week. There is an air of anticipation that this will herald a wave of buying as the world’s biggest market comes back online. The Middle East and East African nations have done some Aussie business in the past week as the Black Sea origins become harder to source. Australia is well placed to price in demand into SE Asia and will need to ship huge volumes quickly to avoid the Northern Hemisphere new crop in June/July.
After an Arctic blast settled over the US last week (snow in Florida has to be a rarity), there are some fears that there has been as much as 15% winter kill on exposed wheat. This will be hard to quantify until the crop breaks dormancy in March/April. It has helped to build some risk premium into CBOT wheat. Similarly, the wheat crop in Russia remains vulnerable. Temperatures appear to be holding above critical levels for the time but remain exposed without appropriate snow cover. Dry conditions prevail which will become more of an issue as Spring develops.
Next week
The chaotic nature of US politics continues to create volatility. At a fundamental level, the weather market and annual ‘fight-for-acres’ season will soon be upon us. Fingers crossed for some good pricing opportunities ahead.
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Click on graph to expand
Click on graph to expand
Data sources:Reuters, Bloomberg, SovEcon, Aria, Next Level Grain Marketing
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Have any questions or comments?
Black Sea Risk Rises
To paraphrase the old Footy Show, it’s been a BIG week in grain markets. It all kicked off last Friday with the USDA’s July supply
Global wheat and corn supplies edging lower.
The United States Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) Report was released on Friday, showing a tightening trend across wheat
Weather wobbles
All the major agricultural commodities had their turn in the spotlight this week. Corn and soybeans led the AG complex higher early on, driven by
Selective pulse planting reactions
It seems an age ago now, but back at winter crop planting time, there were all sorts of decisions being made around rising fertiliser and
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Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
MEET THE TEAM
Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
SERVICES AND CAPABILITIES STATEMENT BROCHURE
We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.