AgriVisor Morning MarketWatch

Friday, July 06, 2018
***** Corn up 1 1/4 to 1 3/4 at the break; soybeans higher by a penny; Chicago wheat unchanged. ***** 

   # Tariffs are now in place, from the U.S. against China and from China against the U.S., both new tax schemes covering $34 billion worth of the other country’s goods.  China has promised to retaliate against what officials there are attempting to portray as U.S. aggression while President Trump says tariffs against $500 billion are possible if China does not address unfair trade practices.
   # Now market participants are bracing for the next round of fire.  The tariffs may remain in place without any immediate follow-up action from the two governments.  The two parties may meet for another round of negotiations and could eventually take the path of compromise.  Or, worst-case for markets is the possibility of immediate follow-through on President Trump’s and President Xi’s respective promises of escalation.
   # With all of the trade concern, soybean export sales were strong this week.  Old-crop sales totaled 561,600 tons with another 458,700 tons booked for the new crop.  New corn commitments disappointed at 440,700 for old-crop and 232,100 for new.  
   # The 6-10 day outlook is mixed drier for the Western Corn Belt and wetter for the ECB.  The forecast does provide solid chances for rain over the dry areas of Kansas and Missouri late in the period.  A slight cool down comes for the country this weekend, but heat returns by Monday next week.  Meteorologists are keeping tabs on a tropical storm named Beryl that has formed in the central Atlantic ocean.
   # Another key crop report approaches, this one coming on July 12th.  The government analysts will update the new crop balance sheets to reflect the latest acreage estimates.  They will also have to make new demand projections under the assumption that Chinese tariffs will remain in effect through the next marketing year.  Plenty of fireworks could also follow from adjustments made to global production forecasts.  
   # The analysts at Informa are out with an early pair of yield predictions, calling corn 176 bushels per acre and soybeans 49.8 bpa.  Corn and soybean yields in 2017 were 176.6 bpa and 49.1 bpa, respectively.      
   # Outside markets are weathering the latest tariff developments well so far this morning, but nervousness is still evident.  Aside from digesting trade news, investors wait to have a look at the latest unemployment report and also have an eye on Secretary of State Pompeo’s visit to North Korea. 

***** Cattle futures pressured by profit-taking near key highs; hogs look to outside markets for direction into the week’s end. ***** 

   # Cattle futures should find guidance from a cash trade that develops more fully today.  Calls are mixed on cash market direction.  Demand worries are part of the mix today now that 4th of July is in the rearview and because of trade uncertainties.          
   # August futures are bouncing around in between support from the 10-day moving average and resistance from the 20-day.  Fundamental input is mixed with wholesale pork prices up but cash down on Thursday.