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Fontanelle, IA | "The fact is, if China goes thru with their tariffs on soybeans July 6th, it will have a dramatic effect on our markets & prices, irrespective of who's to blame but we can talk about those effects in an objective way."
- As you have said over the past few weeks, the drop in soybean prices has been related to tariff threats and the fear of what tariffs will do to this country. I believe that tariff stuff is probably 80-90% baked in right now. If it wasn't, Brazil soybean basis would not be +$2/bu as Kory Melby was quoted as saying last week. traders are betting/and have placed bets as to how this will equilibrate.
- Now, if our CCC program or Indemnity fund or whatever it is called contains $30-50 billion as Don Roose stated in Market to Market over the weekend is then used as a patch to buy up farmer reserves to then ship/store, that will have implications on price too by shrinking available near-by supplies of beans.
"But six days later, on July 6th, the tariffs will become reality (or not, depending on last minute developments). Assuming that crop conditions stay more or less the same, I think we can say that any market moves just before or after July 6th can be assigned to the tariffs."
- I disagree that any market moves after July 6th can be assigned to the tariffs. It is a futures market that is perceiving future value at points between the here and now and 4 years into the future. If a deal that gets brokered between our 2 countries on July 9 (for illustration purposes) would then be post tariff date and market goes up? You would then say then that tariffs are price positive? Markets have moved very hard and fast downward over the past week so the reaction to future news might be just as dramatic upwards on positive news.
- I think it is dangerous to assume that crop conditions will stay more or less the same. I'm not a crop killer looking out my window.... but we are only half way to the bin and the last half of the journey is just as important as the 1st foot/step that started this journey. Some of us have gotten timely rains in moderate amounts - akin to coasting into the gas station right on "E". Some to the north had a full tank of gas (soil profile) and are now in the position of Chris Farley in Tommy Boy where he is signing "I'm a maniac" while David Spade sprays him with more gasoline...
This market looks to currently be in the "sell the rumor / tweet" etc..... worry about "buying the fact" of tariffs later.
Futures prices for new crop delivery months on corn and soybeans are now in some of their lowest levels for this early in the growing season especially in light of a contracting global supplies. This has to be a value buying area if you were China, Mexico, Columbia, etc. And, we farmers are not feeling the best (as judged by our agtalk mood index) about markets currently.... its about due for a trend change - but I don't know when.
We shall see!
Edited by Baby Robin 6/25/2018 23:24
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Lets lay out some non political market factors as a group
