Markets had a big bearish reaction to USDA’s Aug. 10 Crop Production and Supply & Demand Reports, with soybeans facing the stiffest price pressure. USDA’s initial assessment of the soybean crop production at a record and the yield at the second highest ever. Its corn crop estimate would be the third highest on record and the yield would beat last year’s record by 1.8 bu. per acre. The bigger crop estimates translated into a rise in projected new-crop ending stocks for both corn and soybeans compared to last month. The report data was definitely not what bulls were hoping for.
On the trade front, relations with China worsened this week, as both countries announced new 25% tariffs on an additional $16 billion of goods, effective Aug. 23. Some observers say Chinese leader Xi Jinping thinks President Donald Trump will alter his current stance if Republicans lose one or both chambers of Congress in the November elections. But Trump watchers say he will not waver. The U.S./China trade battle is going to take time to resolve. Some positive news appears to be getting closer on a revamped North American Free Trade Agreement, however. U.S. and Mexican trade negotiators made good progress this week and Canadian trade officials are coming to Washington next week.
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