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Is this beginning to sound more and more like a school yard squabble to determine who is the strongest or smartest, while in reality, neither of the involved parties is showing the either of those attributes. After President Trump slapped tariffs on $50 billion worth of Chinese products last Friday, they retaliated in like kind, which has now prompted the President to threaten an additional 10% tariff on $200 billion of Chinese imported goods to which they have responded will be met with retaliatory measures. Just one of the many problems with this though is that unlike a school yard confrontation where the two facing off many end up with a black eye or a few scrapes and bruises, in this case, it is crowds on the outside of the fence, lacking the power to stop it, who are suffering the blows. I am almost expecting to hear someone blurt out, “Yeah, and your sister is fat too!”
Of course, the ongoing breakdown in prices for corn and beans cannot be completely laid at the feet of the trade turf was as overall crop conditions have made it difficult for longs to defend their positions. According to NASS, the good/excellent rating for corn gained back the 1% is surrendered last week and stands once again at 78%. It is actually normal for the rating to perk up a bit this time of year baring a real weather issue, but why let that stand in the way of a sell order. Interestingly enough, soybeans rankings slipped 1%, but we still have 73% of the crop rated good/excellent. With the exception of cotton, which slipped 4% and now sits at just 38% good/excellent, it would appear that the condition of every other crop improved. Winter wheat 1%, spring wheat 8%, barley 1%, Oats 3%, sorghum 4%, peanuts 3%, and rice 3%. What is not for a bear to love?
The ag sector is not feeling much “love” and support from the macros either. Metals and energies are all under pressure this morning, and the dollar is higher once again. One notable change this morning though is over in the equity markets where it would appear that the trade is growing just a bit concerned that the escalation in tough trade talk could be moving closer to turning into reality and if that were the case, would not be positive for the business climate.
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