Low Volume Holiday Trade Could Cause Sparks to Fly

Published on: 02:02AM Dec 21, 2018

Good Morning from Allendale, Inc. with the early morning commentary for December 21, 2018.

Grain Markets look for support amid hopes of more Chinese purchases of US products. End of month/quarter/year position shifts are likely as we round out the year. Next week, we expect volume to be low as traders celebrate the holidays. Grain markets will have a normal Sunday night opening, but will close at 12:05 on Monday, and will not reopen until Wednesday at 8:30 AM.

Weekly export sales reported corn sales of 2,517,012 metric tonnes (1,974,392 for 2018/19), within the 2.3 – 2.9 million tonne trade estimate, but also a record for this specific week in history. Soybean sales of 2,963,412 tonnes (also a record), were a bit over the 2.1 – 2.7 million tonne expectation. Wheat sales were reported at 313,580 tonnes, under the 500,000 – 700,000 trade expectation. The report included the big sales to China and Mexico.

China plans to make a third round of U.S. soybean purchases within days, two sources familiar with the matter said, after a trade war truce between Washington and Beijing triggered two waves of buying. More than 2 million tonnes of additional purchases are likely before the Christmas holiday on Dec. 25, bringing total to more than 5 million tonnes. (Reuters)

Russian Wheat Exports may slow if the recent tender by Egypt is any evidence. Russia's offer was $8.00 per tonne higher than their previous offer to Egypt, and also above tenders from Ukraine and Romania.

China's Commerce Ministry has launched an anti-subsidy investigation against barley which it has imported from Australia.

Managed money funds were estimated sellers of 21,000 corn contracts, 5,500 soybeans, and 3,500 soyoil. They were buyers of 2,500 wheat, and thought to be neutral in soymeal.

House Republicans passed a stop-gap spending bill that delivers $5 billion for President Donald Trump’s border wall, setting up a standoff with the Senate that significantly raises the likelihood of a government shutdown this weekend. (Politico)

Outside markets have seen plenty of volatility in recent trade with energies and equities leading the charge lower. Economic reports out this morning will have an influence and include Personal Income/Spending, Durable Orders, and GDP. All will be out at 7:30 AM CST.

Quarterly Hogs and Pigs reported All Hogs at 101.9% of last year, a bit below the analyst estimate of 102.7%. Kept for Marketing was also at 101.9%, analysts were expecting 102.7%, and Kept for Breeding was 102.4%, while analysts expected 102.9%.

Cattle on Feed reported total On Feed at 101.9%, slightly higher than the 101.8% expected by trade. Placements were at 95.1%, but analysts thought we would see 93.8%. Marketings were reported at 101.4%, just above the average guess of 101.0%.

Cold Storage Report will be released today at 11 AM CST.  Allendale expects to see 508.787 mil. lbs. of beef at the end of November.  The five-year average change for the end of November is a 2 million lb. increase.  Allendale forecast pork storage at the end of November at 495.002 million lbs. This is a drawdown of 76 million lbs. (96 million last year, 56 million five-year average).

Dressed Beef Values were higher with choice up .77 and select up 0.41.  The CME Feeder Index is at 145.74. Pork cutout value was up .82.