Trump puts tariffs on additional $300B of Chinese goods
Trade negotiations between the world's two biggest economies had been stalled since May. Ahead of last week's trade meetings with China, President Trump made threats against the Chinese avoiding a trade deal during his first term, saying the negotiations would get tougher in his second term if they were hoping to deal with a different U.S. president.
This aggressive tone carried over to Thursday, when President Trump claimed that the Chinese were changing the "deal" from previous negotiations, and the U.S. will be implementing a 10% tariff on $300 billion of Chinese goods (to go into effect on Sept. 1). These tariffs can also be raised to 25% at a later date.
As one would expect, this takes a lot of hope of a trade deal away. Markets were pressured as a result. Soybean prices fell 17 cents per bushel, crude oil fell $4 per barrel, and the stock market was down significantly, as well. Many producers have struggled without China as a buyer during the last year. This move seems to lock that same trend into place for the 2019/20 crop year, too.
Additionally, the U.S. Federal Reserve cut interest rates for the first time since 2008. Normally, this would be the main talking point. However, President Trump's announcement of more tariffs took the spotlight right back.
Minneapolis wheat futures had been sitting on support levels, looking for a reason to break to a new low. Weather has been mostly favorable after a dry start to the growing season. U.S. corn prices have been working lower after a spring/summer rally on wet planting conditions delaying fieldwork. But the new tariffs sent things over the edge, and futures pushed to a new low on Thursday.
In the U.S., winter wheat harvest is in its final weeks. The U.S. Department of Agriculture reported 75% of harvest was done compared to 86% for the five-year average pace. Spring wheat conditions dropped modestly to 73% good/excellent compared to 76% a week ago.
The durum market remains quiet. Minneapolis durum prices were unchanged from a week ago. North Dakota's crop is 65% good/excellent and 96% has headed.
The canola market is back down near old lows after mounting some support over the last couple of weeks. Pressure from the U.S. soybean complex spilled over and took prices down. As U.S. and China's trade talks have soured, hope for any sort of improvement in the Canada/China relationship is dwindling.
U.S. barley crop conditions improved from a week ago. 77% of the crop is rated good/excellent compared to 76%last week.
Mustard seed trading interest has been light through the summer. Prices are firmer for new crop supplies for producers, though the old crop/new crop spread did narrow in the last week.