Tariff-Free U.S. Soybeans Offered to Chinese Buyers

Published on: 05:05AM Oct 23, 2019

Good Morning from Allendale, Inc. with the early morning commentary for October 23, 2019.

Grain markets are mixed to unchanged as harvest pressure weighs the grains down as wet, cooler forecast maps and U.S. – China trade optimism supports the markets.  Traders will continue to focus on harvest progress as frost concerns head into the Midwest next week.

China offered 10 million tonnes of tariff-free quota to several major Chinese and international soybean crushers to import soybeans from the U.S., according to Reuters.  The quota was offered to state-owned crushers, privately owned crushers and major international trading houses with crushing plants in China at a meeting called by the state planner.

Allendale’s Fall Corn and Soybean Outlook Update was last week. If you missed it, you missed a look at what might be coming our way in these markets. What should we expect for harvest this year, and what could that mean for pricing? What will be the next catalyst to move markets? The recording of the presentation is available here, now.

China and the U.S. have achieved some progress in their trade talks, Vice Foreign Minister Le Yucheng said, and any problem could be resolved as long as both sides respected each other.  "What China wants is to deliver a better life for the Chinese people. We don't want to take anything from anyone else. There's no such thing as China replacing anyone or threatening anyone," he said.

Ukraine and Russia have both been looking for more rains this Autumn.  In Russia, the warm and rainy weather has speeded up sowing in recent weeks and is expected to favor works in the next few weeks.  The Ukrainian agriculture ministry said farms had sown around 6.4 million hectares of winter grains as of Oct. 21 (6.8 million at the same time last year).

A U.S. Court of International Trade judge struck down a sugar trade pact with Mexico renegotiated in 2017 by the Trump Administration, saying the decision to amend a previous deal was unlawful.  The U.S. Department of Commerce's determination to amend an agreement that suspended U.S. countervailing duties on Mexican sugar imports was unlawful, said Judge Leo M. Gordon in a court document.  The judge ordered the trade deal amendment to be immediately vacated.

September Cold Storage report was supportive for both beef and pork. USDA's monthly count of food items in frozen storage found 464.186 million lbs. of beef at the end of September (495.482 million lbs. estimated). Beef stocks declined by 6 million lbs. during September (a month where stocks typically increase).  USDA counted 598.899 million lbs. of pork at the end of September (632.581 million lbs. estimated, an 8 million lbs. drawdown from last month).

USDA September Cattle on Feed report will be released this Friday at 2 p.m. CDT.  Analysts’ estimates for the report average On Feed (as of Oct. 1) at 1.22% below last year, at 11.272 million head.  Placements averaged at 1.63% above last year, at 2.084 million head.  Marketings averaged at 0.87% above last year, at 1.734 million head.

Lean hog futures dropped sharply, pressured by larger than-expected, near-term hog supplies and concerns that U.S. pork export demand would not be large enough to absorb the expected surplus of meat produced.  "We have questions about the demand, while at the same time the supply looks ridiculously large," said Rich Nelson, chief strategist with Allendale Inc.

Dressed beef values were higher with choice up 0.80 and select up 3.64.  The CME feeder index is 144.93.  Pork cut-out values were down 2.43.