Winter wheats finished mixed but well off their lows, despite the outside noise from row crops. Implied volatility in May Soft Red Winter wheat went out at 22.65 per cent. The China tariffs included US high-protein wheat, which could see approximately 700,000t of exports affected. This will not have material impact, and should see a demand swap from Canada to the US for South American high-protein needs. Winter wheats were looking very strong in yesterday’s session, with talk of 100 kilometre-per-hour winds and dust storms in Kansas, as well as record low temperatures forecast for the weekend. Combine this with very little precipitation and a dry moisture profile, and we should see further deterioration in conditions. Russian and European values held up well, despite the US issues. Algeria purchased 330,000t of optional-origin wheat. Export figures due out tomorrow are expected to show 350k,000t of US old-crop wheat has been sold.

The Chinese government has introduced a 25pc tariff on US soybean imports in response to the Trump Government’s announcement of a tariff on $50 billion worth of Chinese goods. China’s response was to issue tariffs worth the same amount, and including US corn, sorghum, dried distillers’ grain (DDG), wheat, soybeans and beef. The market overreacted to the news early, with beans falling 54.5 cents before rationalising the information and determining that China cannot do without US beans. The sharp rally in Brazil and Argentinian fob premiums will see US beans take out the lion’s share of other demand, and open up the potential for US beans to be shipped to crushers in Brazil. The tariff will not come into effect until the end of May at the earliest, and this saw Pacific North West exports very active as traders aimed to get sales on before tariffs come into effect. Soymeal finished up $1.80 per tonne, while soy oil was down 66 points. Argentina has heavy rains forecast next week, which will likely impact harvest progress and possibly quality.

Corn

Canola followed early pressure in beans before forging its own path higher. Canadian canola has a host of its own issues, with delayed new-crop plantings and limited available old-crop supplies. Basis continues to climb in old-crop, despite higher futures movements. The China/US trade war is prompting some optimism for transferred export demand, although beans and canola are not directly substituted. Canadian fob premiums improved in response to the tariff announcement.

Aussie markets remain fairly quiet, with limited direction from global markets being insufficient to encourage any significant risk-taking. The eight-day forecast remains dry, which is prompting further concerns for new-crop winter plantings. If they eventuate, Chinese tariffs on US imports should be reasonably supportive for Aussie grain and oilseed values. At this stage, tariff talk looks to be a muscle-flexing exercise by the US, and it will need to officially announce the tariff changes in order for China to respond accordingly. The Australian dollar reacted positively to the news, as a potentially weaker US economy could result in increased support for the AUD.