3 Big Things Today, May 2
1. Wheat Turns Lower Overnight as Investors Book Profits
Wheat futures turned lower overnight after jumping by double digits on Tuesday.
Investors who were long the market, or bet on higher prices, likely booked profits after futures shot up nearly 20¢ to a nine-month high.
Prices rose yesterday on reports from the Kansas Wheat Tour noting that the hard red winter crop in the northwestern part of the state was in dire need of water and warm weather. While that’s true, said the Wheat Quality Council’s Dave Green, rain between now and harvesting in four to six weeks likely would save the crop.
At this point, it’s too early to tell whether plants in the area will yield 20 bushels an acre or 50 bushels an acre, as it all depends on how much precipitation falls between now and harvest, he told Agriculture.com.
The tour resumes today, and scouts likely will find worse-looking crops in the southwestern part of the state that hasn’t seen rainfall, in some cases, in more than six months. Parts of the region are in extreme and exceptional droughts, the worst ratings possible, according to the U.S. Drought Monitor.
Corn and soybean futures were also lower in overnight trading.
Wheat for July delivery fell 4¼¢ to $5.25 a bushel overnight on the Chicago Board of Trade. Kansas City futures lost 3¼¢ to $5.49¾ a bushel.
Corn futures for July delivery fell ¾¢ to $4.05 a bushel overnight.
Soybean futures for May delivery lost 4¾¢ to $10.48½ a bushel. Soy meal fell $2.50 to $401.90 a short ton, while soy oil rose 0.12¢ to 30.45¢ a pound.
2. NAFTA ‘On Thin Ice’ If Deal Not Reached in Three Weeks, U.S. Trade Representative Says
U.S. Trade Representative Robert Lighthizer said Tuesday that if North American Free Trade Agreement negotiations aren’t complete in the next three weeks, the deal may be “on thin ice” because Congress may not have enough time to approve it.
Lighthizer will resume NAFTA negotiations with Canadian and Mexican trade officials on May 7.
“If we can get a good agreement, I’d like to get it done a week or two after that,” he said, according to media reports. “If not, then we start having a problem.”
The Canadian Association of Railway Suppliers (CARS) told its members in a statement on Tuesday after a teleconference with Martin Moen, the director general of the North America and Investment Division and NAFTA deputy chief negotiator, that the U.S. doesn’t want to draw out the talks.
“The U.S. continues to express the desire to conclude the negotiations shortly to avoid the lame duck Congress syndrome, which would manifest if the negotiations would not be concluded by the end of May,” CARS said in the statement. “By concluding the negotiations at the end of May, that would allow Congress to pass the amended NAFTA successfully.”
But there are a number of sticking points that could prevent any deal from being reached in such a short time frame.
Moen said Canada and Mexico both prefer trilateral negotiations; whereas, the U.S. wants bilateral negotiations, CARS said in its statement. The talks have moved from a formal set-date-agenda format to more of an ad-hoc arrangement.
Canada said it’s willing to meet anytime to discuss NAFTA, but the U.S. favors the more formal approach, Moen said. Another sticking point, he said, is that the U.S. ties the agreement with threatened tariffs and quotas on aluminum and steel, but Canada insists the items are unrelated and shouldn’t be negotiated as one.
For now, at least from the Canadian side, there appears little chance that the negotiations will be complete in the next three weeks.
“The future appears to be clouded for the discussions because of the U.S. tariff/quota imposition on steel and aluminum at the end of May,” CARS said in the statement. “Although Canada has made a substantial investment in enforcement, stopping the dumping of steel from other countries through Canada, the U.S. did not appear to be convinced that this is a positive factor for consideration.
“According to Mr. Moen, there does not appear to be a noticeable progress for a quick resolution of the outstanding issues.”
3. Tornadoes Touch Down in Nebraska, Severe Weather Expected to Continue Wednesday
A storm spawning tornadoes hit Nebraska and Kansas on Tuesday, and more rain is on the way today, according to the National Weather Service.
A tornado hit Doniphan, Nebraska, near Hastings along the Interstate 80 corridor 150 miles west of Omaha. Another touched down near Marquette, Nebraska. Little damage was reported.
More rainfall is expected today and possibly tomorrow in the area, as the storm moves through the region. Damaging winds, large hail, and possibly an isolated tornado are expected again on Wednesday, the NWS said in a report.
Farther east, thunderstorms are likely to develop this afternoon and tonight ahead of the slow-moving cold front. Large hail and winds of more than 60 mph are expected, the agency said. Flooding is expected along the Mississippi River, as well.
In the Southern Plains, it’s going to be dry, and red-flag warnings abound.