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.
Wheat markets have been under pressure the past week as building US wheat production trumped the USDA report that showed global wheat stocks shrinking by
The July World Agricultural Supply and Demand Estimates (WASDE) Report produced by the United States Department of Agriculture (USDA) was much anticipated, with most pundits
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.
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.
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.
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.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Data sources:Reuters, Bloomberg, SovEcon, Aria, Next Level Grain Marketing
Categories
Have any questions or comments?
Make it make sense
Wheat markets have been under pressure the past week as building US wheat production trumped the USDA report that showed global wheat stocks shrinking by
A marginally bullish WASDE brings no gains
The July World Agricultural Supply and Demand Estimates (WASDE) Report produced by the United States Department of Agriculture (USDA) was much anticipated, with most pundits
Trump trade waves
Amid all the fighting and bomb dropping recently, the trade dispute issue had taken a back seat. Well fear no longer. Monday night, the US
Wheat rides the cycle
It feels like it has been a relatively stable week in the soft commodity baskets. As always, there is a raft of bullish inflows being
Want market insights delivered straight to your inbox?
Sign up to the mailing list to get regular updates to new analysis and market outlooks
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.