”Phase One” Trade Deal Still Possible This Year

Published on: 04:49AM Nov 25, 2019

Good Morning from Allendale, Inc. with the early morning commentary for November 25, 2019.

Grain markets are higher on some technical buying and higher expectations for improving export demand for U.S. grains.  This week is traditionally a slow week for the grain trades due to the Thanksgiving holiday.  Improving crop weather in Brazil and Argentina also hangs over the market, putting a cap on any rallies.

U.S. national security adviser, Robert O'Brien said a phase 1 trade agreement with China is still possible by the end of the year, while warning that President Trump would not turn a blind eye to what happens in Hong Kong.  "At the same time, we're not going to turn a blind eye to what's happening in Hong Kong or what's happening in the South China Sea, or other areas of the world where we're concerned about China's activity," he said.

CFTC Commitments of Traders showed funds new net position short -123,530 corn contracts, long +18,452 soybean contracts, short -2,049 wheat contracts, long +81,549 live cattle contracts and long +6,007 lean hog contracts.

Brazilian soybean plantings reached 77.3% complete of the expected area to be planted.  This is a slower pace than seen last year and also lagging the five-year average for the period (89.6% complete last year, 80.5% five-year average), according to ARC Mercosul.

Crop ratings for French wheat and barley fell sharply last week while farmers made little progress with sowing and harvesting, data from FranceAgriMer showed, suggesting heavy rain was continuing to affect field conditions.  An estimated 78% ofFrance’s soft wheat was estimated at 78% GTE (84% GTE last week, 82% last year), FranceAgriMer's weekly crop report showed.

The White House has asked Iowa Senator Chuck Grassley's office for input on the administration's latest proposal to boost the ethanol market in 2020, after several conversations between President Trump and advocates critical of the plan.  The request shows the Trump administration may be having second thoughts about the proposal, which the president had hoped would provide additional support in the Farm Belt, a crucial political constituency in his reelection bid, sources said.

China’s pig herd fell 0.6% in October (3% drop last month), this is the smallest month-on-month contraction in a year. They did not disclose the year-on-year decline in October but in September it had dropped 41% on the year.  China's stock of breeding sows rose 0.6% in October, this is the first monthly increase since April 2018, official figures showed, signaling China’s pig production may soon start to recover.

Cattle on Feed report showed On Feed as of October 1st at 101.2% of last year (101.2% average estimate). Placements at 110.2% (111.4% average estimate), and Marketings at 99.4% (99.7% average estimate).

Cold storage report (for October) showed beef stocks at 466.200 million lbs. (465.940 million lbs. average estimate).  Pork stocks at 614.500 million lbs. (560.900 million lbs. average estimate, 581 million lbs. five-year average).

Dressed beef values were lower with choice down 2.29 and select down 2.54.  The CME feeder index is 145.48.  Pork cut-out values were up 1.60.