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3 Big Things Today, July 5

Markets to Resume Trading This Morning; Trade Leads Concerns in Rural America.

1. Grain Markets Set to Reopen at 8:30 a.m., No Overnight Trading

Grain markets were closed in overnight trading due to the Independence Day holiday but will reopen at 8:30 a.m. in Chicago.

Investors are closely watching trade between China and the U.S., while wheat traders will have an eye on the European crop. A Reuters poll showed EU producers will harvest 6 million metric tons less wheat this year due to a hot, dry spring in the north and weather problems in France.

Analysts now forecast production at 136 million metric tons, Reuters said.

Strategie Grains earlier this week reduced its outlook for French wheat production by 4.6 million to 33.2 million metric tons after heavy rain hurt plant development.

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2. Concerns About Trade War With China Lead Rural Concerns, CoBank Says

Concerns about a trade war with China and several other countries lead worries in rural America, according to the most recent Rural Economic Review from CoBank.

Some 70% of U.S. agricultural exports are destined to four countries with which the U.S. is engaged in some sort of trade dispute, the bank’s Knowledge Exchange Division said in its report. That’s tempering optimism that was felt in the first quarter.

“Trade concerns pose the single greatest risk to the projected global economic growth of 3% to 4%,” said Tanner Ehmke, manager of CoBank’s Knowledge Exchange Division. “The U.S. and China have been driving the growth, benefitting emerging markets around the globe. A trade war between the two is dangerous for economies around the world.”

The U.S. is expected to implement threatened tariffs on $34 billion of Chinese goods starting tomorrow. China responded by saying it will not implement duties on U.S. goods unless the Trump administration follows through with its plan, but it has said it will not back down from a trade fight.

The administration imposed tariffs on imports of U.S. steel and aluminum from several countries including China, Canada, and Mexico recently, which drew retaliation from all three countries. It then escalated tensions with China by saying it would add tariffs on $50 billion worth of goods and possibly more if the Asian nation retaliated.

China has said it will add duties on $50 billion worth of U.S. goods in response.

“The shift from trade war rhetoric to reality tempers the optimism felt in the first quarter,” Ehmke said. “Aside from potentially losing market share in emerging markets, the U.S. may face shake-ups in historical supply-chain commitments, as competitors seek new trade relationships amid current trade disputes.”

Respondents to CoBank’s survey said drought conditions are of concern, as are rising interest rates, high fuel costs, and high land-rent rates. Producers aren’t seeing any price relief from inputs, which likely will help reduce net farm cash income this year, the bank said.

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3. Heat Advisories Issued For Much of Illinois, Indiana, Parts of Several States

Almost all of Illinois and Indiana and parts of several other states are facing a heat advisory this morning, according to the National Weather Service.

In central Illinois, temperatures will be around 95˚F. today but the heat index will top out around 109˚F., the NWS said in a report early Thursday morning.

Southern Indiana temperatures will be in the lower 90s with heat indexes around 105˚F., according to the agency.  

The warning is in effect for parts of southeastern Missouri, eastern Arkansas, northern Mississippi, and parts of Kentucky, Tennessee, and Ohio, weather maps show.

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