Coming out of last week's trade, corn markets were building momentum as forecasts remain wet and planting progress was stifled. A quick look at today's planting progress report would have further supported that upward price direction. A full view of the report can be found below:
To date, corn is only 23% planted relative to a 5 year average of 46%. Soybeans stand at 6% planted, whereas 14% is normally planted by this week of the year. Perhaps the worst of the issue rests in Illinois where only 10% of corn is planted relative to a 66% normal pace in the last five years. Soybeans are 13% behind in the Land of Lincoln, with only 3% planted.
While wetness in the Midwest will certainly continue to be a large contributor to price direction, it's effect was "trumped" by news last night of an escalation in tariffs against Chinese goods. In a series of Tweets (below), President Trump let everyone know that he was playing hardball. His administration threatened to move the tariff of 10% that currently exists on approximately $200 Billion of goods imported from China upward to 25% if a deal between the two countries wasn't made by Friday. The Chinese immediately responded that they would not be threatened in the negotiation process and promised to cancel this week's meetings if such talk was not dropped.
The Chinese delegation boarded a plane this morning headed for the US, but follow through on their attendance of this weeks meetings is still unknown. Regardless, this new development throws a wet blanket on current price momentum and threatens to further stifle the ongoing talks that have been in play for several months. This new round of risk should be respected at face value. Contact us to sort through appropriate risk management strategies that meet your needs.