Evidently, feeling like that proverbial pimple-faced 17-year old boy with braces who, try as he may, just cannot secure a date for homecoming, both corn and bean prices swooned yesterday after stories began to circulate that a possible meeting between President Trump and President Jinping could be pushed off until December. “This must mean I am never going to homecoming, let alone prom!” Well, at least some of those fears were dispelled overnight when the Chinese Commerce Ministry spokesman, Gao Feng, reported that Phase One was complete in principle. Still no word on a signing date, but December 3rd, 4th in London was being bantered about as President Trump will be in London at that time for a NATO summit. As I commented yesterday, it sounded as if the Chinese were insisting on a reduction in tariffs before they would agree to move forward, and while no details have yet to emerge, it sounds as if this will be the case, coming in phases. At his news briefing, Gao Feng stated that “The trade war started with tariffs and should end with the cancellation of tariffs.”
There were two other stories overnight from China that are worth mentioning. The first concerns a shipload of U.S. beans that have been sitting at a port in northeastern China for a week, as customs officials and the buyers debated if they were exempt from the 33% trade war tariff. This ship was unloaded yesterday, but for now, the beans remain in storage until the duties are paid. While it is true, when exemptions were announced back in August, not all buyers necessarily qualified. Still, it sounds as if, in this case, it may be that the customs authorities at the Dalian port has not received the “explicit policy paper” and so could not provide the exemption. And you thought government paperwork was onerous here. The other story comes from Chinese State Television where it was reported that the Chinese cabinet has decided the country will create 67 million hectares (165 million acres) of high-quality farmland by 2022 to boost grain production and ensure food security and will also boost hog breeding and increase poultry, beef and lamb productions by removing obstacles to farming. I am not quite sure how they intend to “create” 67 million hectares, and suspect the story was an effort to try and pacify 1.4 billion disgruntled citizens who are paying significantly more for food this year.
Weekly export sales have been released, which contained a pleasant surprise for beans. For the week ending October 31st, we sold a total of 1,807,400 MT or 66.42 million bushels. As you probably suspected, China was the big dog accounting for 53% of the total or 956,300 MT. After them, we find the Netherlands taking 284,100 MT and then Mexico at 106.6k. Corn sales came within the range of expectations at 487,900 MT or 19.21 million bushels. This was 11% below last week but 15% above the 4-week average. Unknown destinations were at the top of the list with 227.7k MT, followed by Mexico at 186.9k and then the Dominican Republic taking 15.5k. Wheat sales slipped in toward the lower end of expectations at 360,600 MT or 13.25 million bushels. This was 27% below the previous week and 14% under the 4-week average. Pork sales fell back to 16,600 MT last week, but the primary buyer was China with 2,800 MT.
One more day until the November production and supply/demand report and once again, here are trade estimates; Corn production is estimated to come through at 13.623 billion bushels coming from 81.39 million harvested acres and a yield of 167.4 bpa. This compares with 13.779, 81.815, and 168.4 last month. For beans, we find an average trade production estimate of 3.512 billion bushels from harvested acreage of 75.36 million and a yield of 46.6 bpa. 2019/20 corn ending stocks are estimated to come in at 1.808 billion, compared with 1.929 last month, beans at 430 million versus 460 in October, and wheat at 1.032 billion instead of 1.043.
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Weekly "2 Minute Drill", Video Breakdown of the Ag Markets 11.7.19