Soybeans Plunge Friday After Trump Announces Tariffs on China

Soybeans plunged on Friday after the White House said it would move forward with 25% tariffs on billions of dollars worth of Chinese goods. 

President Trump said in a statement this morning that due to China's theft of intellectual property and other "unfair" trade practices, the U.S. will impose tariffson Chinese goods that contain "industrially significant technologies." Tariffs on $34 billion worth of Chinese products will go into effect on July 6. The White House said in a statement this morning that it would impose the duties on $50 billion worth of goods. 

The move has sparked fears of a trade war as China said it would impose retaliatory tariffs. Beijing had threatened to impose a 25% duty on U.S. soybeans should Washington move ahead with its plans to impose its own levies. The U.S. exported about $14 billion worth of soybeans to China last year, according to the Department of Agriculture.

The American Soybean Association said it's "disappointed" in the decision. 

"The ASA, on behalf of all U.S. soy growers, is disappointed in the administration's decision, which follows weeks of imploring the president and his team to find non-tariff solutions to address Chinese intellectual property theft and not place American farmers in harm's way," the association said. "ASA has twice requested a meeting with President Trump to discuss how increasing soy exports to China can be a part of the solution to the U.S. trade deficit without resorting to devastating tariffs."

Soybean futures for July delivery fell 23¢ to $9.04 1/4 a barrel on the Chicago Board of Trade. 

Corn lost 1/2¢ to $3.62 1/2 a bushel in Chicago.

July wheat futures in Chicago were down 1 3/4¢ to $4.99 3/4 a bushel while Kansas City futures fell 1 1/2¢ to $5.20 3/4 a bushel. 

July soy meal futures fell $4.20 to $399 per short ton. Soy oil futures fell 0.66¢ to 29.48¢ per pound. 

In the outside markets, the NYMEX crude oil market fell 3.1%, the U.S. dollar is lower, and the Dow Jones Industrials lost 93 points.

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Thursday's Grain Market Review

DES MOINES, Iowa -- On Thursday, the CME Group's farm markets extend this week’s losses, as favorable crop-weather applies pressure.

At the close, the July corn futures finished 13¢ lower at $3.63. December futures settled 12 1/2¢ lower at $3.84 1/2.

July soybean futures closed 8 3/4¢ lower at $9.27 1/4. November soybean futures ended 8 3/4¢ lower at $9.50.

July wheat futures closed 15¢ lower at $5.01 1/2.

July soy meal futures finished $4.50 per short ton lower at $343.20. July soy oil futures closed  0.06 higher at 30.14¢ per pound. 

In the outside markets, the NYMEX crude oil market is $0.34 higher, the U.S. dollar is higher, and the Dow Jones Industrials are 32 points lower.

Join the discussion on crop-weather in Marketing Talk.

Al Kluis, Kluis Advisors, says weather and trade are the two main fundamental factors weighing down prices.

“U.S. weather is leaning negative as we seem to have plenty of moisture and the heat is on the way. Talks of tariffs on goods from China have the market fearing retaliation tariffs on U.S. grains; this has the markets defensive,” Kluis stated in a daily note to customers.

On Thursday, the USDA released its Weekly Export Sales Report showing corn sales at the high end of expectations and soybean exports that beat the trade.

• Corn = 1.176 million metric tons vs. the trade’s expectations of between 800,000 and 1,300,000 metric tons.
• Soybeans = 810,600 mt. vs. the trade’s expectations of between 250,000 and 750,000 mt.
• Wheat = 302,300 mt. vs. the trade’s expectations of between 150,000 and 400,000 mt.
• Soybean meal = 97,900 mt. vs. the trade’s expectations of between 50,000 and 400,000 metric tons.

On Thursday, Informa, a private analyst firm, reportedly raised its estimate for 2018 corn acres to 88.7 million vs. the USDA’s March outlook for 88 million, while the firm sees soybean acres at 89.9 million, up from the USDA’s 89-million-acre forecast.

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Wednesday’s Grain Market Review

On Wednesday, the CME Group’s farm futures markets closed under pressure from favorable crop-weather and trade concerns with China.

Though some flooding has been reported in Illinois, overall, the Midwest crops have been receiving a combination of heat and rain.

At the close, the July corn futures finished 1¼¢ lower at $3.76. December futures closed 1¼¢ lower at $3.97.

July soybean futures settled 18¢ lower at $9.36. November soybean futures closed 15¾¢ lower at $9.58.

July wheat futures ended 18¢ lower at $5.16.

July soy meal futures closed $5.80 per short ton lower at $347.70. July soy oil futures ended 0.03 higher at 30.08¢ per pound. 

In the outside markets, the NYMEX crude oil market is $0.23 higher, the U.S. dollar is lower, and the Dow Jones Industrials are .33 points lower.

On Wednesday, private exporters reported to the U.S. Department of Agriculture export sales of 177,000 metric tons of soybeans for delivery to unknown destinations. Of the total 5,000 metric tons is for delivery during the 2017/2018 marketing year and 172,000 metric tons is for delivery during the 2018/2019 marketing year.

The marketing year for soybeans began September 1.

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Tuesday's Grain Market Review

On Tuesday, the CME Group's farm markets trade mostly higher, as investors await today's USDA Report.

In early trading, the July corn futures are 4¢ higher at $3.71. December futures 3 3/4¢ higher at $3.92.

July soybean futures are even at $9.53.  November soybean futures are even at $9.73.

July wheat futures are 6 1/4¢ higher at $5.20.

July soy meal futures are $1.60 per short ton higher at $352.80. July soy oil futures are 0.34 lower at 30.24¢ per pound. 

In the outside markets, the NYMEX crude oil market is $0.24 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 24 points lower.

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Monday's Grain Market Review

On Monday, the CME Group’s farm markets dropped lower and never could recover.

Continued rainfall has investors believing that this afternoon’s USDA Crop Progress Report will show strong good/excellent conditions.

At the close, the July corn futures settled 10 1/2¢ lower at $3.67 1/4. December futures finished 9 3/4¢ lower at $3.88 1/4.

July soybean futures ended 15 1/2¢ lower at $9.53 3/4.  November soybean futures finished 16¢ lower at $9.73 3/4.

July wheat futures ended 5 1/2¢ lower at $5.14.

July soy meal futures closed $6.60 per short ton lower at $351.20. July soy oil futures settled 0.06 higher at 30.58¢ per pound. 

In the outside markets, the NYMEX crude oil market is $0.39 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 41 points higher.

Al Kluis, Kluis Advisors, says investors will be eyeing weather and crop reports.

“The USDA Crop Progress Report today should show ratings for corn and soybeans down 1% to 2% this week – but still very high for the time of year,” Kluis stated in a daily note to customers.

He adds, “I’m watching to see whether July corn futures can hold the Friday low at $3.73 this week.”

David Tolleris, Wx.Risk.com meteorologist, says the Midwest will stay wet for weeks.

"Most areas of the central and northern Corn Belt got 1 to 3 inches of across 70% of the Corn Belt over the weekend.  Many areas of Wisconsin and northern Illinois had 2 to 6 inches," Tolleris stated in a daily note to customers Monday.      

Tolleris adds, “The next seven days have seasonal temps with a lot of rain. The GFS model is, of course, wetter, but the European weather model is also wet. The 10- to 14-day forecast also keeps it wet.  Some heat shows up at the end of the two-week forecast. It stays wet or at least seasonal rain."