Market Update 6-14-18: China vs Trump

Jun 14, 2018

Market Update 6-14-18: China vs Trump
The following is an email from Marcus Ludtke - CMC

My message to farmers this morning…

Today’s move in corn is all China v Trump related. The U.S. tariffs on Chinese goods go into effect tomorrow, June 15th. Therefore the CME is assuming China will retaliate with a 25% tariff on soybeans. Furthermore China has yet to buy U.S. sorghum despite China lifting restrictions on U.S. sorghum imports. This is all gamesmanship and corn/soybeans are clearly collateral damage.
The key is this will pass…and the weather is actually starting to lean positive. 100 degree temperatures this weekend in Iowa.
I would not panic this a.m. It’s hard not to get involved in the emotion; however I’m not going to make any irrational trades right here when one tweet from Trump could put corn back up 10-cents (same thing  for soybeans). Politics is certainly a nearly impossible outlier to quantity; however my guess is all parties will want to save face as tomorrow’s tariff deadline approaches.
Additional Corn Commentary from this A.M.
  • Corn bulls continue to battle headlines surrounding trade negotiations. With what appears to be greater uncertainty surrounding NAFTA and Chinese tariffs, the trade is extremely apprehensive in trading more traditional fundamentals. U.S. demand remains extremely strong, especially ethanol and exports. At the same time global supply has ticked back a bit with the drought in parts of Russia and Ukraine pulling down most production forecasts.
  • Are markets sending a warning shot to White House on hazards of undermining US Ag exports?  Notable that PRC still not buying any US sorghum despite PRC lifting of restrictions on US sorghum imports.  Internal PRC buyers-be it sorghum or soy—are justifiably playing it safe with regards to purchasing US ag products until trade friction (which appears to be escalating short-term) abates.
 The information contained herein, or as an attachment, is gathered from sources we believe to be reliable, but cannot be guaranteed and should not be relied upon as such. Opinions expressed are subject to change without notice. Trading in commodity futures or options involves substantial risk of loss. Past results are not indicative of future results.

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