China/U.S. trade war roils ag markets

Winnipeg (CNS Canada) – ICE Futures Canada canola contracts were stronger on Wednesday, as an escalating trade dispute between China and the United States could open the door for more Canadian business.

Responding to U.S. threats, China announced proposed tariffs of its own on a wide range of U.S. imports overnight – including soybeans. While the resulting selloff in Chicago Board of Trade soybeans initially spilled into the canola market, the Canadian oilseed managed to turn higher amid ideas that the spat could create export opportunities elsewhere.

China is already thought to be looking for alternatives to U.S. soybeans, with canola basis levels in Vancouver reportedly rising to C$60 above the futures from C$40 on Tuesday.

However, large old crop supplies and expectations for increased acres this spring did put some pressure on values. The Canadian dollar was also a bit firmer on the day.

About 39,372 canola contracts traded on Wednesday, which compares with Tuesday when 20,904 contracts changed hands. Spreading accounted for 24,958 of the contracts traded.

SOYBEAN futures at the Chicago Board of Trade were down sharply on Wednesday, as the markets reacted to proposed Chinese retaliatory tariffs on US$50 billion worth of U.S. goods.

While the tariffs are not yet in place, the threat was enough to spark the heavy losses in soybeans seen today, with some stops likely hit on the way down.

However, soybeans did manage to settle well off of their session lows, as the market uncovered some support.

Declining production estimates out of Argentina and the smaller-than-expected soybean acres in last week’s USDA prospective plantings report also remained supportive.

CORN futures were also pressured lower by the trade dispute, as China is a major buyer of U.S. corn.

Beyond the trade issues, seeding is in its early stages in the southern U.S., while cooler weather to the north may delay some corn planting.

WHEAT futures ended mixed, with small gains in Kansas City hard red winter wheat and losses in the other markets.

Spillover from the declines in corn and soybeans accounted for some of the selling pressure, as wheat also reacted to the Chinese trade war.

However, concerns over cooler-than-normal temperatures across a large portion of the U.S. winter wheat region provided underlying support, especially as conditions are already poor in many areas.

 

OUTSIDE MARKETS

Light crude oil nearby futures in New York were US$63.40 per barrel.

 

In the afternoon, the Canadian dollar was trading around US 78.29 cents up from, down from 77.43 cents the previous trading day. The U.S. dollar was C$1.22773.

 

Winnipeg ICE Futures Canada dollars per tonne.

Canola May 18          528.40s          +1.90  +0.36%

Canola Jul 18 533.80s          +1.80  +0.34%

Canola Nov 18           521.50s          +2.00  +0.38%

Canola Jan 19            524.50s          +1.70  +0.33%

Canola Mar 19           525.40s          +1.50  +0.29%

 

American crop prices in cents US/bushel, soybean meal in $US/short ton, soy oil in cents US/pound. Prices are displayed with fractions (2/8, 4/8, and 6/8) instead of decimals. -2 equals .25, -4 equals .50, -6 equals .75. The “s” means it is the settlement.

 

CHICAGO

Soybeans May 18      1015-2s         -22-6  -2.19%

Soybeans Jul 18        1026-4s         -22-6  -2.17%

Soybeans Aug 18      1028-6s         -22-6  -2.16%

Soybeans Sep 18       1022-6s         -22-6  -2.18%

Soybeans Nov 18      1019-0s         -23-2  -2.23%

 

Soybean Meal May 18          381.8s            +1.8    +0.47%

Soybean Meal Jul 18 384.9s            +1.6    +0.42%

Soybean Meal Aug 18           381.8s            +0.9    +0.24%

 

Soybean Oil May 18  31.68s            -0.66   -2.04%

Soybean Oil Jul 18    31.96s            -0.66   -2.02%

Soybean Oil Aug 18  32.08s            -0.67   -2.05%

 

Corn May 18  381-0s            -7-4     -1.93%

Corn Jul 18    389-6s            -7-4     -1.89%

Corn Sep 18   396-6s            -7-4     -1.86%

Corn Dec 18   405-0s            -7-2     -1.76%

Corn Mar 19  412-2s            -6-6     -1.61%

Oats May 18  230-0s            -2-4     -1.08%

Oats Jul 18     237-6s            -2-4     -1.04%

Oats Sep 18   242-4s            -2-6     -1.12%

Oats Dec 18   250-6s            -1-4     -0.59%

Oats Mar 19   256-6s            -1-4     -0.58%

 

Wheat May 18           455-6s            -1-6     -0.38%

Wheat Jul 18 473-0s            -1-0     -0.21%

Wheat Sep 18            490-0s            -0-6     -0.15%

Wheat Dec 18            512-2s            -0-2     -0.05%

Wheat Mar 19           529-0s            +0-6    +0.14%

 

MINNEAPOLIS

Spring Wheat May 18          576-6s            -6-2     -1.07%

Spring Wheat Jul 18 587-2s            -5-0     -0.84%

Spring Wheat Sep 18           595-0s            -3-6     -0.63%

Spring Wheat Dec 18           607-4s            -4-2     -0.69%

Spring Wheat Mar 19           619-6s            -4-0     -0.64%

 

KANSAS CITY

Hard Red Wheat May 18     486-0s            +1-2    +0.26%

Hard Red Wheat Jul 18        504-2s            +1-0    +0.20%

Hard Red Wheat Sep 18      522-6s            +1-0    +0.19%

Hard Red Wheat Dec 18      546-2s            +0-6    +0.14%

Hard Red Wheat Mar 19      560-6s            +0-4    +0.09%

 

Chicago livestock futures in US¢/pound, Pit trade

Live Cattle (Pit) Apr 18        113.025s        +1.050            +0.94%

Live Cattle (Pit) Jun 18        102.325s        +2.700            +2.71%

Live Cattle (Pit) Aug 18        102.600s        +2.700            +2.70%

 

Feeder Cattle (Pit) Apr 18   134.500s        +3.975            +3.05%

Feeder Cattle (Pit) May 18  135.125s        +4.150            +3.17%

Feeder Cattle (Pit) Aug 18   140.225s        +3.050            +2.22%

 

Lean Hogs (Pit) Apr 18        53.075s          +1.400            +2.71%

Lean Hogs (Pit) May 18       62.875s          +1.675            +2.74%

Lean Hogs (Pit) Jun 18         73.275s          +1.625            +2.27%

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