Grains Recovers Ground as Dollar Resumes Downside, New Trade War Chapter

Grains such as wheat, soybeans, and corn are trading down on Friday as investors are closing positions on Friday with a weak dollar.

Also, a new chapter of the trade war between China and the United States, weather in the U.S. and India, and exports and imports reports in America and China are affecting grains.

Trump new tariffs to China

In a few days, 100% of “made in China” products will be tariffed in the United States as President Donald Trump announced that starting on September 1, the remaining $300 Billion of Chinese imports will be imposed with a 10% tariff.

That means that starting in September day-to-day products will be impacted by the Trade War. Before, it was tariffs for chemicals, industrial things, etc. However, now, mass-consumption such as Barbie toys, cloths, AirPods, or iPhones will get its piece of the cake.

Equities are falling hard on Friday due to the new chapter in the trade war. Risk aversion is the theme of the day.

The U.S. added 164K jobs in July

The Bureau of Labor Statistics reported on Friday that the U.S. economy added 164K new jobs, a number in line of expectations. However, the result failed to give investors reasons to believe in another rate cut by the Fed.

With an active labor market, the Fed will have more room for action. America’s central bank is not in a rush, and numbers confirm it.

That affected the U.S. Dollar index, which reacted to the data with gains, but the overall risk sentiment in the market also touched the DXY and sent it back down.

In that framework, political, economic, and hard weather conditions included, grains are posting small gains on Friday. It is also influenced by profit booking on the last day of the week.

Soybeans defend the 8.400 area

After posting three days of drops, soybeans found support at the 8.400 area on Thursday with the grain performing positive on Friday.

Traders are closing positions ahead of the weekend, and the unit is now trading 0.40% positive on the day at 8.500. Technical conditions remain unfavorable, so a sustainable recovery from current levels is not expected. Only a rally above the 8.800 area would give hopes to soybean buyers.

To the downside, 8.400 is immediate support. Below there, 8.350, 8.80, and then the 7.800 are the levels to watch.

Corn reacts and recovers the 3.900 area

Corn founded support at 3.830, its lowest level since May 24, on Thursday. That level acted as strong support and fueled the unit to recover ground on Friday.

Corn is trading 1.30% positive on Friday, mostly motivated by profit booking ahead of the weekend and a weak dollar. Technical conditions remain weak for the unit, and any recovery is expected to be short-lived.

To the downside, corn is expected to return to 3.750 and 3.680 in the next days.

Wheat positive on Friday

Prices of wheat are moving higher on Friday as investors are closing short positions ahead of the weekend. The unit is now running 1.45% positive at 4.820.

Wheat is in its way to test the 200-day moving average at 4.860. The wheat situation is different from soybeans and corn as technical conditions suggest that a positive u-turn in prices is possible with a close above the 4.800 as a significant development.

However, any bullish movement will be linked to a possible break above the 5.000 area. Meanwhile, we can say that wheat is mixed.