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The U.S. and China continue to exchange body punches as the trade dispute between the two economic powers has worsened. Last week, President Trump announced additional tariffs on $300 billion of Chinese goods that will go into effect in September. He also accuses them of currency manipulation. China retaliated this week by announcing they will stop purchasing U.S. ag products. Meanwhile, traders are throwing their hands up in the air wondering when the brawl will end! In other developments, the crop rating for corn slipped one-point to 57 percent in good-to-excellent condition. According to Ag Watch’s yield model, this equates to a national yield of 164.5 bpa compared to USDA’s estimate of 166.0 bpa. Looking at exports, they remain lethargic with inspections last week of 24.8 MB. Shipments are running 235 MB short of reaching USDA’s target.
Soybeans stand to lose the most from worsening trade relations between the U.S. and China. Since January, they have been consistent in buying our soybeans taking an average of 11.8 MB each week. Last week, they took 21.2 MB, the most since February. Their consistency was probably protective measures taken in the event negotiations fell apart, which has occurred. Although the trade delegation meets again in September, it may be 2020 before the dispute is resolved. Looking at other developments, the rating for soybeans was unchanged last week at 54 percent of the crop in good-to-excellent condition. According to Ag Watch’s yield model, this translates to a national yield of 48.5 bpa which is on par with USDA’s estimate. Meanwhile, the upper Midwest is running two weeks or more behind in development which means the crop will be pushing to reach maturity even with a normal frost date.
Wheat continues to be plagued from cheaper values in the Black Sea Region and Europe. Last week, export inspections were 14.5 MB with the pace running well short of reaching USDA’s projection of 950 MB. Right now, shipments are on track for 760 MB. In other developments, winter wheat harvest is winding down at 82 percent complete while harvest of spring wheat has just begun at 2 percent. At times, wheat trades on its own merits but is mostly a follower of corn and soybeans.
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