Chinese Soybean Sales Firm Cash Markets Push Grains Higher
Feb 04, 2019
Good Morning from Allendale, Inc. with the early morning commentary for February 4, 2019.
Grain markets continue their push higher. Soybean futures reached its highest level since June on news of strong soybean sales to China, but the market pared gains as traders still show concern for the large amount of global supplies. Wheat futures rise as firming cash markets signaled a pick-up in export demand, and corn followed the firm trend. Grain traders will continue to watch for additional export sales as the USDA gets caught up on releasing current data as we approach another possible government shutdown on Feb. 15th.
Last week, March corn futures were down 2 cents, March soybeans down 7.75 cents and March wheat raised 4.5 cents, March soymeal down $1.90 and March soyoil down 17.
News sources believe US trade officials will travel to China in mid-Feb to continue trade talk resolutions. Chinese markets will be closed all week due to celebrating the lunar new year.
Grain traders will be waiting for the USDA’s crop report this Friday at 11 p.m. CST. This report will update 2018 US corn and soybean production, Dec 1st US grain stocks, 2019 US winter wheat acreages and 18/19 US Supply and Demand balance tables (many looking for cut in USDA’s 2018/19 soybean export forecast of 1.9 billion bushels).
Russia's government has told Brazil it may restrict soybean imports temporarily if producers do not reduce their volume of pesticide use, especially of products using glyphosate, said Brazil's Agriculture Ministry. Brazilian soybean exports to Russia totaled 1 million tonnes last year (84 million tonnes exported total by Brazil last year).
Chinese state-owned firms bought at least 1 million tonnes of U.S. soybeans on Friday, a day after U.S. – China trade talks yielded progress toward a trade deal and a Chinese commitment to buy more U.S. soybeans. The purchases are slated for shipment between April and July, with a large share expected from U.S. Gulf Coast export terminals, said traders with knowledge of the deals.
Sovecon, Russia’s agriculture consultancy said it had upgraded its forecast for their wheat crop an additional 2.7 million tonnes (77.3 million tonnes to 80 million tonnes). The forecast was raised due to good weather with lots of snow this winter, Sovecon said.
Wheat traders will be looking for 12/31/18 Canadian wheat stocks of 23.4 million mt (23.7 million mt last year) and canola stocks of 14.7 million mt (13.9 million mt last year) on tomorrow’s report.
Tens of thousands smaller Chinese hog farmers are expected to abandon pig farming after months of weak prices and restrictions on moving pigs to market. That will reduce production in the country by one-fifth this year and boost prices and demand for cheaper imports, according to several analyst estimates. Small farmers producing fewer than 500 pigs each year account for about 40 percent of China's output (280 million pigs/year), according to 2016 figures from consultants at Rabobank.
First notice day for February live cattle futures is today.
Dressed Beef Values were mixed with choice down 1.13 and select up 0.27. The CME feeder index is 141.86. Pork cut-out values were down 1.06.