Grains Retreat on Retaliatory Tariff Headlines from China
Grain markets were able to stabilize some in yesterday’s trade, but more trade headlines this morning has futures under pressure. Can the markets battle back again, or are the headwinds too much heading into the weekend?
China retaliates in global trade war with sweeping tariffs on U.S. goods
April 4
(Reuters) –
China announced additional tariffs of 34% on U.S. goods on Friday, the most serious escalation in a trade war with President Donald Trump that has fed fears of a recession and triggered a global stock market rout.
Beijing also announced it was adding several U.S. entities to an export control list and classifying others as an “unreliable” entity.
Soybeans
Wednesday’s Recap
Soybean futures were lower Thursday with the May contract finishing the session at a one week low of 1011’4, off 18’0 (1.75%). Combined volume came in at a one month high of 396,365, with the May contract seeing a heavy 169,499 traded. Total open interest ended the session at a one month high of 870,194, higher by 7,555, or 0.88%. May open interest dropped 2,649 (0.80%), to 329,017.
Technicals
Soybean futures got hit hard earlier this morning on the back of headlines that China would implement additional tariffs in retaliation. This dropped prices right through support levels. Prior to today, we’ve outlined 991-995 3/4 as a MUST HOLD pocket for the Bulls. The market is lingering just below here in the early morning session. A failure to hold on a closing basis could leave the door open for more downside with the contract low from December coming into focus, 955 1/2.
Technical Levels of Importance
Resistance: 1036 1/2-1042****, 1063 1/2-1066 3/4***
Pivot: 1028-1031 1/2
Support: 1008-1013**, 991-995 3/4****
Popular Options
Option trading centered around the May 1020 calls with 4,588 done and the Nov 940 puts with volume of 8,017. Calls with the greatest open interest are the July 1040 strike (16,838), and for the puts are the July 1040 strike (17,199).
Volatility Update
As measured by SVL, implied volatility finished moderately higher, up by 0.15 to end the day at 16.07. Historical volatility (30-day) ended at 14.45%, up by 0.76%, to a one week high. The SVL Skew was sharply lower with the 30-day down by 0.81, closing at a one week low of 0.18.
Seasonal Tendencies Update
(Updated on 3.31.25)
Below is a look at historical price averages for July soybean futures on a 5, 10, 15, 20, and 30 year time frames (Past performance is not necessarily indicative of future results).
Commitment of Traders Update
Friday’s Commitment of Traders report showed Funds were net sellers of roughly 21k futures and options contracts. This puts them net short 42,959 contracts.
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