Headlines:
Here’s What’s Happened to Soybean Exports Since Tariffs (U.S. soybean exports have risen, due to falling prices)
The evolving developments with tariffs between the U.S. and China continue to influence the outlook for soybean prices. The relationship between U.S. and competitor export prices along with the changing nature of trade flows merit monitoring during the 2018-19 marketing year. The implementation of tariffs on Chinese goods and the subsequent retaliation led to an adjustment of trade flows in world soybean markets over the last few months. As the tariffs went into effect, a price gap opened between Brazilian and U.S. export prices. The gap continually widened when comparing an index of soybean prices at the port of Paranagua and New Orleans prices since early June. The gap reached its broadest level late last week at an approximately $1.90-per-bushel difference. New Orleans prices came in near $8.50 per bushel. It is difficult to predict future changes in the spread between the two prices, but they directly relate to the tariff level in China on U.S. soybeans. The development of this price gap indicates the impact of tariffs on soybean markets and highlights switches in Chinese soybean buying this year.
Category 4 Hurricane Florence targets the coast of North/South Carolina with evacuations ordered in some areas
As Hurricane Florence continues its menacing churn toward the Eastern Seaboard, multiple states bracing for the potentially “catastrophic” storm are ordering residents along the coast to leave. Emergency officials in the Carolinas and Virginia gave evacuation orders to more than 1.25 million people Monday, including everybody along South Carolina’s 187-mile coastline. Florence is expected to make landfall later this week — its precise target still uncertain, though officials up and down the coast warned of potential destruction. “We do know that we’re in the bull’s eye,” North Carolina Gov. Roy Cooper (D) said at a Monday news briefing. “We’re liable to have a whole lot of flooding,” South Carolina Gov. Henry McMaster (R) said at a separate briefing. “We’re in for a real episode here.” The National Hurricane Center said Monday that the storm is rapidly intensifying over the Atlantic Ocean and is now a major hurricane, with winds near 130 mph. Florence was upgraded from Category 3 to Category 4 on Monday and is expected to strengthen further before making landfall Thursday night or Friday morning.
Summary:
Like yesterday, corn oscillated on both sides of neutral before settling 3 tick out of the money today. The trade has been indecisive ahead of the USDA WASDE report tomorrow which does not have a history of moving the markets. The focus for tomorrow’s report will most likely be to see if the 178 bushels per acre mark is reached as that would be the key to the USDA balance sheet. Demand has remained strong with current crop exports looking to exceed the USDA estimate of 2.40 BB and thereby causing a decrease in carryout stocks. Soybean faltered after finding early support in the trading day. The ongoing trade dispute between the US and China continues to be reported as a drag on the Soybean complex when in reality the appropriate narrative should focus on the massive supply. Tomorrow’s USDA report is expected to show a yield increase with the average estimate near 52.2 bushels per acre. The new crop carryout is also expected to exceed 800 MB. China continues to concentrate most of its buying in South America although as expected they will eventually have to buy from the US. There was some tonnage listed in yesterday’s inspections report. The discount for US soybeans compared to Brazilian offers makes the US competitive. Wheat continued traded lower surrendering yesterday’s gains. Last week’s sell-off positioned the US to become more competitive on the global stage and wheat may be due for a low soon but perhaps not until it retests at least 490 on the December contract.
