CASH MARKET WRAP: Trump tweets roil markets

Wheat

Sentiment was bearish over the week as specs continued to build shorts in the US and Europe, with moderate concerns over crop conditions in the US and Black Sea doing little to halt wheat’s slide.

By 1500 London time on Friday the SRW front-month contract was down 1.9% to $4.265/bu, while HRW was up 0.7% at $3.915/bu.

That meant the spread between the two had narrowed 3.5 points over the week – away from a 12-year gap hit last week – at around 30.5 points by Friday afternoon.

Cash trade was again disrupted by more holidays on the Black Sea.

Agricensus’ spot Russian 12.5% wheat assessment was down $2/mt to $207/mt FOB, while new crop for July was up $1/mt to $183/mt as buyers and seller ideas narrowed.

In Argentina, spot 12% wheat was down 1% over the week to $215/mt FOB Up River, while Australian APW dropped 1.5% to $211.25/mt as the AUD weakened against the USD.

Corn

Markets digested the twin issues of burgeoning South America supply, and the potential of the US farmer switching from corn to soybeans as rain continues to lash the Midwest.

Into that, Trump's tweet at the start of the week that Chinese imports would face higher tariffs slammed beans and weighed on corn.

The underlying May futures contract ditched almost 20 cents, surpassing contract lows to reach $3.44/bu by Thursday.

However, buyers focussed on meal and feed wheat purchases instead. Basis values were stable across most origins, letting flat prices do the work, but US FOB Gulf values firmed.

With US net sales slowing dramatically, June FOB Gulf offers in the low 70 cents over July futures will crimp export appetite.

APM-15 US Gulf FOB outright price dropped $5/mt over the week to $161.50/mt, although it is still $5/mt above APM-14 FOB Santos, as Brazil’s harvest kicks into gear, and a huge $13.50/mt above Argentina’s FOB Up River.

Soybeans

Futures hit an 11-year low by Thursday as Trump announced new tariffs on $200 billion of Chinese goods, moving from 10% to 25% which came into force on Friday.

China announced it would be taking retaliatory measures and that was enough to persuade markets it wasn’t a knee-jerk reaction.

July futures sank to $8.14/bu by Thursday, down 31 c/bu from $8.45/bu.

Premiums moved as you would expect – US premiums flatlined at 45-50 c/bu over July futures for June shipment, while Brazil premiums soared, rising 50% to 70 c/bu.

However, that only partially offset weaker futures and flat prices for FOB Brazil fell $1.50/mt to $324.75/mt by Thursday.

Without a trade resolution, premiums are expected to climb further as the Brazilian farmer licks his lips at becoming the only market for Chinese crushers.

In China those higher premiums fed straight into prices, but with soymeal surging on the expectation of a greater hike, gross crush margins look excellent at $33/mt – up 3% on the week.