Morning Markets: Weather Concerns Dominate After China Tariff Turmoil

(Agrimoney) –  Thursday saw markets recover their poise after the turmoil from Tuesday’s overnight US import tariff threat from China. While the potential for restricted US exports to China is still causing ripples, weather remains the fundamental market driver.

All major commodities closed up on the day. CBOT May wheat was 1.48% up to$4.62-1/2 a bushel; CBOT corn 1.77% up to $387-3/4 a bushel; CBOT soybeans 1.77% higher at $10.33-1/4a bushel and soymeal by 0.71% to $3.84-1/2 a bushel. May ICE canola futures were 0.13% higher at $5.29 a bushel.

“Markets continued to consider the implications of Chinese import tariffs on some agricultural products, as prices were supported overall today,” commented CRM Agri. “Markets are trading rather irrationally as traders struggle to make sense of trade tariffs and future implications.

“Soybeans recovered after yesterday’s overreaction to the Chinese import tariffs as traders realised the reliance of China on US supplies, with limited other exporters.”

US lacks moisture

Wheat prices remain supported by ongoing concern over the condition of the US Hard Red Winter wheat crop, and ongoing dry conditions in the south. Benson Quinn’s weekly drought monitor predicts some rainfall in central Texas but warns western areas still lack moisture.

“Latest model runs show a reduced potential for precip from southwestern Kansas into southeastern Colorado for the next week. Cold temps are forecast for the weekend, but April 13-19 should see a warm up across the region.”

Spring plantings remain delayed due to colder, wetter conditions across the Northern Hemisphere US Wheat Associates notes that Hard Red Spring wheat plantings in the top four HRS producing states – Minnesota, Montana, North Dakota and South Dakota – have not started yet due to “extremely cold, snowy weather across the region”. Wet weather in Canada is reported to be delaying canola plantings there.

Planting delays frustrate in Europe

In Europe, CRM Agri says its clients “remain frustrated all over the UK, Europe, and the Black Sea by the planting delays”. But the likelihood of harvest 2018 yield penalties due to constrained crop growth periods is supporting prices.

Matif maize reached its highest point since early November – up 0.84% to €170/tonne for August – with LIFFE wheat continuing to gain strength, closing 0.38% up at €165.92/tonne for May. This is its highest level for a month – while the euro is weakening, EU wheat exports are “sluggish, with EU wheat exports running 25% behind last year’s volume at the same stage of the marketing year.

CRM notes that higher palm prices helped support OSR values in Europe – palm oil would become more attractive should China be faced with higher import tariffs for US soybeans.