Market News- POET: Portland 02/22/19 10:42:37 AM
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|Thursday, February 21st
- Sharply higher overnight with all grains catching a bid around midnight and continuing to push higher thru the rest of the night. Articles floating around this morning that China could buy $30 Billion/year in US agricultural products. Supposedly, this would be $30B above pre trade tariff levels which were at $24.2B in 2017.
- The reaction in the markets to the headlines goes to show just how sensitive the market is to the unknown potential of these trade talks. It's easy to get caught up in the mix, but without more clarity it may be hard for the market to do anything more than simply trade back to high end of the range. Maybe we can sustain it better than I think, but we'll have to wait and see.
- The two sides are working on a reported 6 Memorandums of Understanding to present to Trump and Xi for approval sometime in March. The 6 MOU's cover Forced Technology & Cyber Theft, IP Protection Rights, Services, Currency, Non-Tariff barriers to trade, and Agriculture. This is more specific than what we've seen so far, but still lacking in details.
- The USDA Annual Outlook meeting will start today with the primary news to be released being acres today, and full 2019/20 S&D tomorrow.
Wednesday, February 20th
- Corn had a solid move higher overnight trading as much as 3 3/4 cents higher, but saw prices collapse in the last hour of trade to finish the night session only slightly higher. Meanwhile, soybeans and wheat both collapsed from near unchanged levels to sharply lower…especially for wheat.
- Yesterday, there was a rumor floating around that a feed additive in Canada tested positive for African Swine Flu (ASF), but we're being told this morning that was not true. Regardless, the market has been shaken a little bit as traders start to wonder if it's just a matter of time before the disease impacts North American operations.
- These ASF rumors shouldn’t be impacting wheat, which has actually been the downside leader. I'm not sure what to make of that exactly, but would point out that wheat can be a very technical market due to lower volume of trade and right now the technicals look bad.
- Corn finding strength on comments from Trump that China will purchase large amounts of corn: "These are not just, you know, let's sell corn or let's do this…It's going to be selling corn, but a lot of it, a lot more than anyone thought possible"
- Tomorrow, the USDA will likely release their 2019 acreage estimates (non-survey based) with new crop S&D's released on Friday. Keep in mind, that these numbers are collected in a different manner than the monthly S&D numbers which won't be released for new crop until May.
- Also on Friday we'll get completely caught up with export sales which will include the second round of soybean purchases from China and give the market a better gauge of where corn and soybean sales stand relative to USDA projections for the year.
- Trade talks are a mixed bag…on one hand, they continue to progress in some fashion and it's more likely that a deal will get done. On the other hand, it's possibly looking less likely that they are going to rush to get something done by March 1st so the longs that have been eagerly anticipating large ag commodity purchase announcements may have to wait longer and seem to be getting tired of holding longs in a market that's going sideways to lower.
- Today there will be some heavy hitters meeting in the trade negotiations with US Sec Treasury Mnuchin, US Ambassador Lighthizer, and China Vice Premier Liu meeting in DC to continue talks. Still no scheduled date for Trump and Xi to meet however.
- Egypt's GASC is tendering for a FH April shipment of wheat with Russian wheat possibly still being in the mix long after when most thought their supplies would have dried up.
- World wheat values are in decline which is contributing to the lower CBOT wheat values. Argentine corn is also discounted to US values which hints at a slower U.S. corn export program going forward.
Tuesday, February 19th
- Mixed bag to start the week with something for bears and bulls to both talk about, but maybe not as much ability to move the needle in terms of a sustained directional move.
- South American weather continues to look favorable with solid precipitation over the next two weeks in both Brazil and Argentina.
- Thursday/Friday the USDA Outlook Board will issue their annual February reports. The most interesting part of this report is likely to be their first hint at acreage expectations which given current price action may not look much different than what they had in their 10 year baseline numbers back in November. Basically, not shifting enough beans to corn so beans remain oversupplied and corn remains adequate to tightening.
- We'll also get completely caught up on export sales with a data dump on Thursday.
- Continued trade discussions in Washington this week as well with mixed views on how they are progressing. There's still no scheduled meeting between Trump and Xi which has to happen before anything gets finalized. The March 1st deadline is coming up rapidly with mixed opinions on whether there will be an extension that keeps tariffs from ramping up.
- Corn export inspections will be issued today after yesterday's holiday.