Glacier FarmMedia | MarketsFarm — The day after United States President Donald Trump’s tariffs on Canadian, Mexican and Chinese imports came into effect, crop markets at the Chicago Board of Trade on March 5 recovered some of the previous day’s damage.
But Terry Reilly, senior agricultural strategist with Marex in Chicago, said which direction prices will go towards depends on the headlines.
“People are still trying to figure these markets out,” he said. “If we get a deal in place sooner than later, then obviously (the markets) might be a little bit friendly. But right now, we’re seeing a bearish soy complex. Corn prices have really gotten hit … People are bargain-buying and (it’s) the same for wheat.”
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Exports to continue
Despite the tariffs, Reilly believes the U.S. will continue to export corn to Mexico and wheat to southeast Asia.
“I don’t see a major problem with shipments going forward, but we’re looking for shipments to be on the decline for U.S. soybeans,” he added. “We’re looking at very choppy trade going forward and maybe a little bit more of a bearish undertone in the (soy) complex and grains to maybe stabilize at least pricewise until we get through some of these headwinds with the headlines.”
While purchases of U.S. soybeans are expected to slow down in favour of the upcoming South American crop, Reilly said the Chicago soy complex will be more affected by the tariffs than corn or wheat.
“If we see cancellations (of shipments), I think that would be definitely bearish,” he said. “Soybean oil is really affected by Canadian canola imports. So we’re going to have to keep an eye on Canada to see if people are (switching to) canola oil and going forward.”
At the moment, Reilly said there is no end in sight to the tariffs, adding that the trade will evaluate them, “hour-by-hour and headline-by-headline.”
Winter wheat, WASDE come into focus
Meanwhile, the trade will place some of its focus on winter wheat conditions.
The U.S. Department of Agriculture will release its monthly supply/demand estimates on March 11, but Reilly does not expect too many changes.
“I think the USDA is going to take a conservative view to address the export situation. They do need to take soybean oil exports higher and maybe lower biofuel usage,” he said. “To address a lot of the demand category, they’re going to wait until the end of the month when stocks come out.”
