7/9/18: Mark's "Market Talk" Blog

Tariffs go into effect, markets bounce, too much water in some areas, heat units accumulate as the forecast turns dryer.

President Trump did as he said he would and last Thursday night the first major round of tariffs were put into place. The market reacted with a sizable bounce especially in beans as they closed 38 higher while corn was 8 cents higher. So was it a sell the rumor buy they fact kind of day, or is the dryer forecast starting to get some attention? I think we can credit both thoughts for the turn around. We have been trending lower for weeks now and it appears the market is oversold and due for a correction. Exports for both corn and beans have been running high ever since the first tariffs were announced. Some would say it was forward buying meant to beat the tariff and others will point to the fact we have the cheapest corn and beans in the world. China will buy their beans from someone and if we aren’t that someone the beans they do buy will have to be replaced. One story Friday had Brazil buying US beans to crush since China may buy all their available stocks. Looks like the 3rd parties and the shippers may come out the winners in some of these deals. For the week September corn was unchanged and August beans were up 14 cents. Both new crop grains matched the old crop. Chart watchers are now looking for some retracement to the upside for both corn and bean prices. Most areas have had near perfect conditions to this point but with the dry forecast coming right behind pollination there is some concern starting to take place. The areas that have seen too much rain are starting to dry out but it sounds like the holes are larger than expected and the big unknown is how much nitrogen have they lost in a vast wet area of the Mid West. So suddenly we go from the doom and gloom we’ve had in the markets for the past 6 to 8 weeks to the thought that maybe they is some hope after all. We will sure know more a week from now.

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