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3 Big Things Today, August 1

Soybeans Lower in Overnight Trading; Trade Worries Rise on Reports of Higher Tariffs.

1. Soybeans Drop on Renewed Trade War Concerns

Soybeans plunged double digits overnight after the Trump administration reportedly indicated it may raise proposed tariffs on Chinese goods.

Prices early this week were higher on signs of thawing trade tensions between the U.S. and China, but took a turn amid reports that the administration may bump proposed tariffs on $200 billion worth of Chinese goods from 10% to 25%, which was first reported by Bloomberg.

The ongoing trade war between the U.S. and China has caused prices of agricultural commodities to drop in the past few months, but they seemed to be taking a turn higher amid improved demand recently and declining crop conditions in several key Midwestern states.

Soybean futures for November delivery dropped 11¾¢ to $9.07¼ a bushel overnight on the Chicago Board of Trade. Soy meal fell $2.60 to $338.80 a short ton, and soy oil lost 0.10¢ to 29.20¢ a pound.

Corn futures for December delivery fell ¾¢ to $3.85¾ a bushel overnight.

Wheat for September delivery rose 5½¢ to $5.59¼ a bushel in Chicago, while Kansas City futures gained 5½¢ to $5.62 a bushel.

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2. Optimism About U.S.-China Tensions Tempered Amid Threats of Higher Tariffs

Optimism that the U.S. and China would find an amicable solution to the ongoing trade dispute between the countries were tempered yesterday amid reports that the Trump administration is considering increasing proposed tariffs on Chinese goods.

The U.S. on July 6 announced that it was officially implementing a 25% tariff on $34 billion worth of Chinese goods, a move met with retaliation from China, which imposed an equal amount of levies on an equal amount of U.S. goods, including soybeans.

Naturally, soybean futures declined, dropping 60¢ in a week. Since then, however, signs of demand for the oilseeds, declines in crop ratings in some Corn Belt states, and optimism that China would return as a buyer of U.S. beans gave prices, which are up more than 10% in the past two weeks, a bump.

The optimism was short-lived.

In mid-July, President Trump instructed the U.S. Trade Representative to propose another round of tariffs, in this case, a 10% levy on $200 billion worth of Chinese goods.

Yesterday, several news agencies, led by Bloomberg, reported that the administration is considering bumping that levy to 25%, again shocking the markets and sending soybean prices down. The proposed tariffs – regardless of where they end up – could go into effect as soon as September.

China, meanwhile, reportedly warned the U.S. against “blackmailing and pressuring” negotiators into talks by threatening to increase the tariffs, Bloomberg reported.

“If the U.S. takes measures to further escalate the situation, we will surely take countermeasures to uphold our legitimate rights and interests," China Ministry of Foreign Affairs spokesman Geng Shuang said at a press conference, the news agency reported.

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3. Thunderstorms Forecast in Parts of Illinois, Indiana With Lightning, Rain Possible

Thunderstorms are possible in parts of northern and southeastern Illinois and southwestern Indiana on Wednesday, according to the National Weather Service.

“Isolated thunderstorms are possible this afternoon, especially along the Indiana border (with Illinois),” the NWS said in a report early Wednesday morning. “The storms will produce dangerous lightning, along with locally heavy rainfall. However, severe weather is not expected.”

The storms are likely to persist until Thursday.

Farther west, storms are also possible in parts of east-central Nebraska and central Iowa, according to the agency.

The NWS said there’s another chance of storms in the region from Friday through Sunday.

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