Phase 1 Trade Deal to Be Signed This Week

Published on: 05:00AM Jan 13, 2020

Good Morning from Allendale, Inc. with the early morning commentary for January 13, 2020.

Grain markets edged higher as the market remained optimistic of the signing of the Phase 1 trade deal between U.S. and China this week, which calls for significant purchases of U.S. ag supplies.  Market gains were contained by better crop conditions in South America and higher U.S. corn and soybean production numbers from the USDA.  Traders will continue to monitor the signing progress of Wednesday’s trade deal.

Last week, March corn futures were unchanged, March soybeans up 4.5 cents, March wheat up 9.5 cents, March soymeal was up $2.40 and March soyoil was down 70 points.

Our Annual Winter Outlook Conference takes place later this month, January 28th - 30th. Drew Lerner of World Weather, Inc. will kick it off for us January 28th with his 2020 weather outlook. He'll be followed by our grain and oilseed outlooks on the 29th, and our livestock outlooks on the 30th. Get registered to view our latest price outlooks, trade strategies, and more insight to what 2020 will bring to our markets.

China's commitments in the Phase 1 trade deal with the U.S. were not changed during a lengthy translation process and will be released this week as the document is signed in Washington, U.S. Treasury Secretary Steven Mnuchin said.  "We have been going through a translation process that I think we said was really a technical issue," Mnuchin said. "And the language will be released this week.  So I think it is -- the day of the signing, we will be releasing the English version.  And people can see. This is a very, very extensive agreement," he added.

USDA's Crop Production, Grain Stocks, Supply & Demand, and Winter Wheat Seedings reports were released on Friday.  The USDA raised domestic corn and soybean production despite the adverse weather and delays during the 2019 growing season.  The USDA also said winter wheat plantings fell to 30.804 million acres, this is the lowest acreage since 1909.  Corn yield was increased to 168 bpa with corn production at 13.692 billion bushels (expected 13.513 bil. bu.).  Soybean yield at 47.4 bpa, and soybean production estimated at 3,558 billion bushels (expected 3.512 bil bu.). Dec. 1 stocks seen at 11.389 billion bushels for corn, soybeans lowered to 3.252 billion bushels (3.746 bil. bu. last report), and wheat stocks at 1.834 billion bushels (2.009 billion bushels last report).

CFTC Commitments of Traders showed funds new net position short -80,887 corn contracts, long +1,159 soybean contracts, long +27,687 wheat contracts, long +80,686 live cattle contracts and long +9,195 lean hog contracts.

Weekly export sales showed corn sales of 161,900 tonnes (expected 350,000 to 725,000 tonnes), soybeans at 358,900 tonnes (expected 400,000 to 850,000), wheat at 130,600 tonnes (expected 200,000 to 550,000), soymeal at 74,200 tonnes (expected 75,000 to 250,000), and soyoil at 2,600 tonnes (expected 0 to 25,000).

The U.S. Government Accountability Office (GAO) will review the Trump administration's use of waivers exempting oil refineries from the nation's biofuel blending requirements, after lawmakers called for an investigation.  The Small Refinery Exemptions are intended to protect refineries in financial distress from the cost of blending ethanol into gasoline, but the U.S. corn lobby and its representatives have accused the administration of overusing them to help oil companies at the expense of farmers.

Germany’s government said it is concerned about the spread of the pig disease (ASF) in wild boars in Poland close to the German border.  Poland has recorded 55 outbreaks of ASF in wild boars in December, the World Organization for Animal Health (OIE) said.

Dressed beef values were mixed with choice up .08 and select down .13.  The CME Feeder Cattle Index is 146.83.  Pork cut-out values were down .33.