Grain markets are all lower on Tuesday morning. Hogs are also under pressure with cattle higher and feeders making new contract highs.
Funds Selling in Grains on Weather and Yield Prospects
The grain markets put in an ugly day on Monday and are seeing following through fund selling early Tuesday.
Frayne Olson, NDSU Extension Crops Economist, says benign weather and improved crop ratings are weighing on the corn and soybean markets.
USDA increased the good to excellent rating on U.S. corn to 74%, up 1% from last week and that is raising yield estimates above the 181 bu. per acre trend line yield USDA started the season with. Private estimates are from 183 to 190.
Soybeans were rated 66% good to excellent, unchanged from a week earlier but weather continues to look favorable applying downward pressure on prices.
Winter wheat futures are also lower on hedge pressure says Olson, as the harvest has now caught up to normal at 53%. That is also dragging down spring wheat futures, despite a 3% drop in crop ratings.
Tariff Concerns Also Weigh on Grain Markets
Olson says the market is also seeing heightened anxiety regarding trade and tariffs as 14 countries received letters on Monday warning of higher tariffs of 25% to 40%.
The biggest trading partners on that list were Japan and South Korea, which are both looking at 25% tariff increases.
Olson says the good news is neither of those countries has signaled retaliatory tariffs yet and that will be the key for the impact this has on agriculture as both countries are large consumers of corn, wheat, beef and pork.
Meanwhile, President Trump has signed an Executive Order which delays implementation of the tariffs until Aug. 1, providing some wiggle room for getting more frameworks in place.
The EU has surprisingly changed course and looks like it may be able to reach some sort of an agreement before the tariff hike.
China Still Uncertain
The big deal though is the Aug. 12 deadline for working out a broader deal with China.
Olson says while all of these other deals are positive for agriculture, the sum total will not have as large of an impact as a deal with China.
India the Exception
India may be the exception according to Olson, as they are a large enough economy to make a serious impact on U.S. trade.
However, there have been some sticking points on agriculture that have stall a broader deal with this country.
