The grain market began the week in a state of confusion.
Traders went into last weekend feeling mildly bullish because of wet conditions in much of the Corn Belt that slowed planting. But then President Donald Trump sent out a tweet early Monday, May 6, threatening to dramatically increase tariffs on Chinese goods as soon as the end of the week unless the Chinese met certain trade demands.
It wasn’t a good way to start the week for farmers or for traders. But, after an early nosedive, prices recovered on Monday.
“It looks like a weather market right now,” said Don Roose, president of U.S. Commodities in West Des Moines.
Roose said it is likely several things played into that recovery in grain prices. The first is an underlying weather market, and that is something traders can understand. No matter what happens with trade negotiations, the weather will always remain a market factor.
A second potential reason the market recovered is simply that Trump has made quite a few threats on Twitter. The market may have decided this is just Trump being Trump and that it doesn’t necessarily mean anything.
Either way, farmers can look at a couple of basic market trends when making marketing decisions, Roose said. One is that the basis remains tight. For some farmers, that opens sales opportunities.
Another is that there are big carries in the grain markets, meaning it may pay for some farmers to make advance sales and hold onto their bushels for a few months rather than to try to sell for delivery now, he said.
Finally, the talk has begun into whether a wet spring will lead to any changes in the acreage mix between crops. The May 10 USDA acreage report won’t show any changes, Roose said. But it is possible a wet May could lead to some movement toward soybean acres. That will likely depend on the weather in the next few weeks.