Wheat Leads Sinking Grains Down Following Trump Tweet
August 01 2019 - 4:11PM
Dow Jones News
By Kirk Maltais
--Wheat for September delivery fell 2.4% to $ 4.75 3/4 a bushel
on the Chicago Board of Trade on Thursday, with a surprise about a
new 10% tariff on Chinese goods driving trading lower late.
--Soybeans for November delivery fell 1.8% at $8.65 1/4 a
bushel.
--Corn for December delivery fell 1.8% to $4.02 1/2 a
bushel.
HIGHLIGHTS
More Tariffs More Problems: The revelation that the U.S. will
lobby a new tariff of 10% on $300 billion worth of Chinese goods
took its toll on grains in the late stages of trading Thursday.
China's apparent failure to honor promises to buy more U.S.
agriculture appear to be one factor driving President Trump's
decision. "The U.S.-China overall trade relationship is probably at
the worst it's been since early on in the negotiations," said Mike
Zuzolo of Global Commodity Analytics.
Weak Streak: Grain export sales again lagged behind trader
forecasts, according to USDA data - adding fuel to the fire of
concerns about weak grain demand. Corn sales were particularly bad,
with a total of 272,700 metric tons sold, nearly 50% below normal
levels amid numerous sales reductions from "unknown destinations."
Traders told Dow Jones Newswires Wednesday that they expected corn
sales to total 400,000 to 900,000 tons for both the 2018/19 and
2019/20 marketing years.
Not Low Enough: Wheat was down for the whole day, with traders
saying wheat prices need to come down further to be able to compete
with foreign wheat for global business. For most of this year, U.S.
wheat has been losing business to wheat from Russia and the EU
that's more competitively priced.
INSIGHT
Companies Mixed on China: Before President Trump's tweet this
afternoon, Archer Daniels Midland CEO Juan Luciano said that he is
trying to stay optimistic for a resolution to the U.S.-China trade
battle, which has pressured prices of ADM's grain and agricultural
products. "We remain confident in the resumption of significant
food and agricultural trade flows between the U.S. and China, which
will help bolster margins in the U.S. grain export and ethanol
industries," Mr. Luciano said. ADM rival Bunge was much less
certain, earlier this week saying it wasn't counting on a
resolution of the trade dispute in its outlook for the remainder of
2019.
Still Struggling: U.S. farmers, their suppliers and crop traders
continue to grapple with fallout from the wettest 12 months on
record, said seed and pesticide maker Corteva in its earnings call
Thursday. "The events that transpired in North America this year
are without precedent," says CEO Jim Collins. The former
agricultural unit of DowDuPont trimmed its full-year profit
guidance by $250 million to $300 million, as farmers skipped
herbicide sprays and switched to cheaper seeds thanks to the
rain.
AHEAD
-- The CFTC will releases its weekly commitment of traders data
at 3:30 p.m. EDT on Friday.
-- The USDA releases its weekly grain export inspections data at
11 a.m. EDT Monday.
--The USDA provides its weekly update on U.S. crop progress at 4
p.m. EDT Monday.
Jacob Bunge contributed to this article.
(END) Dow Jones Newswires
August 01, 2019 15:56 ET (19:56 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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