Glacier FarmMedia | MarketsFarm – United States President Donald Trump’s threats to impose tariffs on Canadian and Mexican imports caused a downturn at the Chicago Board of Trade during the week ended Feb. 26.
The May corn contract closed at US$4.94 per bushel for a weekly decline of 18.25 cents. The May soybean contract lost 6.75 cents at US$10.4150/bu. The May Chicago wheat contract plunged 26.75 cents at US$5.7975, while Kansas City hard red wheat dropped 27.75 cents at US$5.9875 and Minneapolis spring wheat shed 30.5 cents at US$6.1775.
Ryan Ettner, broker at Allendale Inc. in McHenry, Ill., said unlike a month ago when Trump threatened tariffs only for them to be delayed, the trade is treating the proposed levies more seriously this time around.
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“(On Feb. 25), just about every market was affected by tariffs: grains, energies, livestock, metals, currencies, bonds. Everybody was trading (that day),” he said. “Last month, (the downturn lasted) two-and-a-half days. As soon as it was announced (the tariffs) would be delayed for 30 days, we erased all that selling going into it.
“I would say the moment is larger this time around. The timeframe might last all the way to (Feb. 28). Most people are deciding this time around we won’t get another delay. Either this is going to get done or we’re going to have tariffs.”
In the absence of tariffs, Ettner said the fundamentals are not suggesting any slide in prices, adding that a return to last week’s values could be possible if tariffs are taken off the table.
Even if tariffs are put in place and the export pace doesn’t fall off, he said there is the possibility of a slow recovery in prices. Ettner also said that if corn’s export pace stays the same, prices should be in the US$5.15 to US$5.20 per bushel range for the May contract.
“(But) you’ll still have a bunch of traders saying, ‘Well, it’s too early to say these exports won’t eventually take a hit,’” Ettner added. “If tariffs are placed, it will take two to three weeks of exports. If those are still strong, people will take away some fear trade here.”
Early acreage estimates suggest some soybean acres will switch over to corn this spring, which would affect prices for both crops. However, the trade is more interested in evaluating whether there will be a decline in seeded acres for all crops.
“If the total acreage for all crops goes down a million (acres) … that’s supportive,” Ettner said.
The trade may wait until the USDA’s weekly export report is released on March 13 to begin any type of aggressive selling if tariffs are in effect and exports decline.
“If you do see that, then you can have a larger correction. But even if there is a serious hit to exports, you’d already have a tough case for discussing corn for under US$4.60/bu. for old crop, even with a slowdown.”
