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3 Big Things Today, January 30

Soybeans, Grains Lower Overnight on Trade Worries; Money Managers Increase Bullish Bets on HRW.

1. Soybeans, Grains Fall Overnight on Trade War Worries

Soybeans and corn were lower in overnight trading as investors take a risk-off approach to agricultural products amid continued concerns about trade.

President Trump last week said he would impose a 20% tax on goods from Mexico to pay for a wall he wants to build on the southern U.S. border. Members of his administration later backtracked, saying the levy was merely a suggestion as a way that Mexico would pay for the construction project.

Over the weekend, Peru and Colombia said they’d back Mexico if a trade war were to break out between the U.S. and its neighbor to the south. Investors are concerned that a trade war with Mexico will reduce markets for American products including corn, soybeans, and wheat.

Exports to Mexico, the U.S.’s third-biggest trading partner, totaled $236 billion in 2015 while imports totaled $295 billion, according to the U.S. Trade Representative. Of that, $18 billion was agricultural products including $2.3 billion worth of corn, USTR data show.

Soybean futures dropped 9¾¢ to $10.39½ a bushel overnight on the Chicago Board of Trade. Soy meal futures lost $4.20 to $338.80 a short ton, and soy oil fell 0.23¢ to 34.04¢ a pound.

Corn futures lost 2½¢ to $3.60 a bushel in Chicago.

Wheat for March delivery fell 3¼¢ to $4.17¼ a bushel in Chicago, while Kansas City futures declined 3¾¢ to $4.30½ a bushel.


2. Money Managers Push Bets on Higher Hard Red Winter Wheat to Highest in 32 Months

Wheat traders don’t seem to be as concerned about trade wars with Mexico and Central American countries, as they drove their bullish bets on the grain to the highest level in almost 32 months last week.

Money managers were net-long 27,550 hard red winter wheat contracts, the most since the first week of June 2014, according to the Commodity Futures Trading Commission.

The bets on higher corn prices have been rising steadily the past few weeks after the U.S. Department of Agriculture said earlier this month that growers reduced winter wheat area by 10% to 32.4 million acres during planting last year, the least since 1909 and the second lowest on record.

Sowing of hard red winter varieties, mostly in the Southern Plains, dropped 12%, while soft red wheat seeding fell 5.6%, according to the USDA.

While investors are more bullish on hard red winter wheat, they’re more bearish on soft red winter contracts. Money managers were net-short 100,372 contracts last week, up from 97,245 seven days earlier, according to the CFTC.

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3. Wind, Snow Expected For Much of Northern Plains, Midwest

A wind advisory is in effect for much of the Northern Plains Monday as gusts are expected to reach as high as 50 mph, according to the National Weather Service.

The advisory is in effect for much of the Dakotas, southwestern Minnesota, and northwestern Iowa, the NWS said in a report early Monday.

“Northwest winds will gradually increase this morning, then become much stronger this afternoon and evening,” the agency said. “While the winds will diminish by midevening, they will remain fairly strong through the night.”

Just to the east, much of northeastern Minnesota and much of Wisconsin are now under a winter weather advisory. Snow is expected to start early this morning in central Minnesota and west-central Wisconsin and quickly spread. Total accumulation of 3 to 5 inches is expected in the advisory area, according to the NWS.

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