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.