Headlines:
- US ATTACKS $100BN IN ‘DISTORTING‘ SUBSIDIES TO CHINESE GRAIN FARMERS
US farm officials have taken China to task over $100bn in “trade-distorting support” for grain farmers – even as the Asian powerhouse is due to become the top buyer of American AG produce. The US Department of Agriculture on Tuesday said it had reported China to the World Trade Organization over allegations that the country had, in offering “excessive” subsidy to corn, rice and wheat growers, “broken commitments” it made on joining the global trade watchdog. The USDA – accusing China of in 2015 paying growers of the three grains nearly $100bn in payment above ceilings its agreed to on WTO accession – said that it would “aggressively” pursue action against the extra subsidies, alleged to “distort” Chinese prices and “undercut American farmers”. “Unfortunately, China’s price supports have encouraged wheat, corn and rice production in China that has displaced imports,” said Tom Vilsack, US agriculture secretary. “When China joined the WTO, it committed to limit this kind of trade-distorting support, which it has failed to do.”
Summary:
The USDA’s bearish WASDE report that was released yesterday had its way with the markets after market participants had some time to digest the findings. December Corn lost almost 3% on the day giving up 9.25 cents. Soybeans surrendered another double digit loss down 18.50 cents (again down just over 20 cents in intraday trading) giving up almost 2% on the day. After managing to close in positive territory yesterday, Wheat was not so lucky and as anticipated was weighed down by the drop in Corn and Beans. December Wheat gave up just over 2% of its own down 8.75 cents.
Corn fired off a sell signal when it broke yesterday’s low of 335.50. The high made on August 19 was strong resistance as expected. The low of the day was 330.25 which was very close to our support level of 329. One more final test of the August 31st low that does not exceed 305 has the potential to stand as the harvest low.
IN our newsletter we published that 990 was potentially key Soybean resistance this week and the price action today did not disappoint. The high for the November contract landed right at 990. The low of the day was also right at our published support level of 958.75. Below 956 we have a minimum price objective of 928 but prices could very well move down to 900 very quickly.
Wheat posted an outside reversal down day breaking yesterday’s low but a break of 396.50 tomorrow should be viewed with significance. We have been sharing that Wheat probably has at least one more leg down that would be led by Corn down to about 373. It is a ways from that price right now but a move down to that level that is followed by a strong move up should be worth noting.
