Do you like pork and beans?

Published on: 10:17AM Dec 06, 2019

Don’t you just love pork and beans?  I know I do.  Granted, that may not be the choice for those who are concerned about how much methane we are sending into the atmosphere, but it is a favored dish for many and obviously is for the Chinese.  They announced this morning that as a goodwill gesture to help defuse some of the issues with the trade war that they are willing to waive tariffs on some beans and pork imported from the United States.  The keyword there is “some,” as no quantities were mentioned.  Regardless, if this were the case, we could see the elimination of a 35% tariff on beans and 30% on pork, which undoubtedly would place our products in a much more competitive position into that market.

As long as we are on the topic of China, they also reported that their domestic soybean production increased by 13% this year to a total of 18.1 MMT or around 661.5 million bushels.  All else being equal, if my math is correct, this would suggest they would need to import approximately 73 million bushels less this year, but of course, with a hog herd that has been reduced 50%, the reduction in demand should be significantly more than that.  Speaking of hogs, the Ministry of Agriculture and Rural Affairs has published a three-year plan for boosting those hog numbers and has a goal of being 70% self-sufficient in the southeastern part of the country during that time period.  They also implied that they are planning for production to be back to normal levels by the end of 2020.  Good luck with that.

Stats Canada has released production figures for that country this morning, which breaks down as follows; Total wheat production is pegged at 32.348 MMT versus an expected 32.6.  Corn production is estimated to be 13.40 MMT compared to the expected 13.70 and beans at 6.045 MMT versus the trade estimate of 6.1.  All of these numbers were lower than previous estimates, as well.

Next Tuesday, the USDA will release the December supply/demand reports. While this is generally regarded as a non-event, there is always the possibility they could hold a surprise.  Here are some trade estimates for ending stocks; For domestic corn, the average estimate is 1.861 billion bushels, compared with 1.91 last month.  Beans are expected to come through at 474 million versus 475 and wheat at 1.009 billion compared to 1.014 billion.  For the global ending stocks, the average estimate stands at 296.1 MMT for corn versus 296 last month, beans at 95.9 MMT instead of 95.4, and wheat at 286.9 MMT versus 288.3.

It would appear that Mexico knows a bargain when they see it.  This morning the USDA reported a sale of 245,872 MT of corn to that nation for this crop year.

African Swine Fever is back in the news this morning, but this time the story is coming from Europe.  Evidently, a case was discovered in a wild boar in Poland, just 25 miles from the border with Germany.  This prompted Germany to step up measures to prevent the disease from crossing the border.  Germany’s pork exports are up 43% to date this year, with the majority of the increase directed towards China.

If we were to call it a week right now, the corn market would be down a nickel, wheat down 21-cents and soybeans up 11 and the first higher weekly close in the past eight weeks.  Looking over at the financials, we find that at this point, the U.S. Dollar is down 50 points for the week, and with the rally this morning, the Dow Jones Industrials are back to just 120 points lower for the week.