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June 07, 2019 | FBN Insights | Kevin McNew

Still No Agreement Between U.S. and Mexico

Tariffs are scheduled to be implemented Monday morning

No Agreement Between U.S./Mexico; Tariffs Implement Monday, June 10   

President Trump said progress was being made in border-security talks between Mexican and U.S. officials and warned that Mexico must “step up to the plate” if it wants to head off tariffs planned for next week on $350 billion in imports.  

Officials held a second day of talks in Washington on Thursday, after negotiations the day before ended without a deal.

Mexico and the U.S. are each other's largest trading partner.  Mexico is the largest export destination for U.S. row crops, pork and poultry.

Tariffs are scheduled to be implemented Monday morning at 12:00 a.m.

Mexican President Obrador said Thursday morning that the country’s delegation had presented a plan to address immigration issues to their counterparts in Washington, and said he was optimistic a deal would be struck to avoid the tariffs.

Mexico hasn’t detailed in public precisely what it is offering to do.  President Obrador said details of his plan would be released Saturday, June 8.  

What It Means for the U.S. Farmer: At FBN we believe that absent any type of agreement or DETAILS from Mexico about how country may respond to U.S. tariffs is a bearish input. We also believe that absent any information that it may be difficult for some futures market participants to be long into the weekend.   

 

Canadian Wheat Exports to China at 14-Year High

Canada has shipped the most wheat to China in 14 years as Chinese buyers shunned the United States.

China bought 1.5 MMT of wheat from Canada from August 2018 through April 2019, nearly double the pace a year earlier and the most since 2004-05.

China is largely self-sufficient in wheat production but does import higher protein wheat classes.  

China imposed a 25% tariff in 2018 on U.S. wheat in a trade war with the United States, which effectively halted sales and shipments to what was the fourth largest U.S. export market the previous season for high-protein U.S. hard red spring wheat.

42,000 tonnes of U.S. wheat exports to China so far this year as of April are the lowest in 11 years.  

What It Means for the U.S. Farmer: At FBN we believe that China’s 25% tariff on U.S. wheat exports has been another trammel for the U.S. farmer to overcome.  We believe that China not importing U.S. spring wheat, HRS, is part of the reason that the ending stocks number for 2018/19 has risen to 313 mbu which is the largest amount since the 1987 marketing year.      

 

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

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