7/30/18: Mark's "Market Talk" Blog

Trumps scores with the EU, dry areas expand, countdown to harvest starts

Last week President Trump and a representative of the European Union came to an agreement that if fully accepted would end the use of tariffs. The deciding factor appears to have been Trump’s threat to put a 25% tariff on European autos sold in the US. That would have added over 13,000.00 to the average car they import which would have thrown them out of the market. Mexico now seems willing to discuss NAFTA terms and come to a resolution so they can be secure trading with us. Canada may be a little tougher to crack as they have been levying tariffs against the US for a long time and our leadership has allowed that. Now that this is out in the open maybe things will be corrected. Dry weather in some wheat growing areas of the world gave that market a reason to move higher and helped pull corn with it. Corn finished 6 cents higher on the board last week but basis levels widened and took most of the gain. There is still a lot of old corn hanging over this market and every nickel we gain breaks more bushels loose. Right now local September cash bids have a 10 cent inverse compared to October. It normally is the other way around but with the old crop supplies and the thought of an early harvest it’s backwards this year. Beans also had an up week as they closed 20 cents higher. It looks like the trade war with China is fully priced into the markets. That’s not saying we might retest this month’s lows. We all know the next 3 weeks will make or break the bean yields. Right now a lot of people in our area need rain. South of Iowa it’s worse while central and northern Iowa is in good shape. Right now a trend line yield of about 48 is being used. If that grows to 50 bean prices will remain depressed and settling our problems with China will become more important. Right now we can only wait and see.

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