Glacier Farm Media | MarketsFarm — With global trade in something of a chaotic mess due to the Trump administration threatening to impose tariffs and placing levies on China, the futures for soybeans, corn and wheat are very difficult to determine said Terry Reilly, senior agricultural specialist for Marex. Added to that, he suggested there could be a few surprises in the February supply and demand report from the United States Department of Agriculture.
Reilly surmised the current markets as being immersed in “uncharted territory,” but noted “the fundamentals suggest prices should grind lower.”
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On Feb. 3, the Trump administration had planned to put 25 per cent tariffs on U.S. imports of most goods from Canada and Mexico, but with a 10 per cent levy on oil products. However, respective agreements were reached with the latter two countries and U.S. President Donald Trump stated he would delay the tariffs for a month.
Meanwhile, Trump pressed ahead with 10 per cent tariffs on U.S. imports from China that’s on top of current levies. In response, China said it will introduce tariffs of 10 and 15 per cent on a wide variety of items from the U.S.
Reilly suggested if negotiations between the U.S. and its top three trading partners go well then things should be fine. However, if talks fail to arrive at long term solutions, then prices for soybeans, corn and wheat are likely to drop.
“With the exception of Minneapolis wheat and maybe soybean oil,” he stated, pointing to the reductions of U.S. imports of Canadian wheat and canola oil.
As for the next World Agricultural Supply and Demand Estimates on Feb. 11, Reilly said there very likely won’t be any big surprises for the USDA’s domestic numbers. If there was to be a notable change, then he said that could be the department increasing U.S. corn exports.
The January estimates placed U.S. corn exports at 62.23 million tonnes, down slightly from December.
The data to watch he said are the USDA’s South American numbers on soybean and corn production.
“In particular possible downward revisions on the Argentine corn and soybean crops,” he said.
Prolonged dry conditions in much of Argentina, as well as parts of southern Brazil are likely to cut into their production of both crops.
The January report kept Argentine corn production at 51 million tonnes and Brazil was held at 127 million. For soybeans, the USDA maintained its calls on Argentina and Brazil at 52 million and 169 million tonnes, respectively.
