Markets Hold Gains Traders Remain Cautious
Dec 04, 2018
Good Morning from Allendale, Inc. with the early morning commentary for December 4, 2018.
Grain Markets closed higher with soybean futures leading the way. While all finished higher, they were well off highs set early in the overnight session after the US-China trade truce was announced and uncertainty grew on what, when and how much agricultural products China would buy from the US. Traders will continue to watch for any signs of tariff relief and/or export sales from China in the next few days.
U.S Agriculture Secretary Sonny Perdue said it is "yet to be determined" whether China will remove tariffs on imports of US soybeans as part of the trade truce. "I've been talking with our negotiators and those are the issues that are going to be fleshed out here in the next few days," Perdue told reporters.
China will probably resume buying U.S. soybeans around Jan. 1 because of limited supplies in South America. Despite China's pledge, the USDA is moving forward with plans to provide a second round of financial aid to U.S. farmers affected by trade wars. Details could be announced by the end of this week, said Sonny Perdue.
Chinese Tariffs will need to be dropped on a range of American farm products before China can fulfill its pledge to buy substantial volumes of U.S. goods, according to Chinese traders. China's tariffs on U.S. soybeans make them $60 per tonne more expensive than Brazil, which will begin harvesting a record crop in a few weeks.
USDA announced private exporters sold 147,500 tonnes of U.S. soybeans to unknown for delivery in 2018/19 marketing year. It was the third sale of U.S. soybeans to unknown destinations in the past four business days. (Reuters)
Australia Wheat Production forecast was lowered by 11% to the smallest in a decade primarily due to a devastating drought across the country's east coast most likely cutting exports from the world's fourth biggest supplier. Wheat production this season is estimated to total 16.95 million tonnes, according to ABARES (19.1 million tonnes last month). This would be the lowest since 2008 when output hit 13.6 million tonnes.
India Wheat Production could fall in 2019 from record output this year as low moisture levels and high temperatures in key growing areas are threatening yields of the winter-sown crop, according to farmers and analysts. India grows only one wheat crop each year, with planting in late October and harvesting in March.
Qatar said it will quit OPEC to focus on natural gas, the once leader of the oil exporting group is trying to show unity in overcoming an oil price slide. "We are not saying we are going to get out of the oil business but it is controlled by an organization managed by a country," said Saad al-Kaabi, Qatar Minister of State for Energy Affairs.
Canadian Oil Companies strongly pushed back against Alberta's mandated cuts in crude production, warning of excessive government intervention even as the Canadian crudes discounted prices narrowed sharply on the announcement of the plan. The mandated cuts are controversial because heavily integrated producers, like Suncor and Husky, benefit from the low crude prices to feed their refineries with more secure pipeline access.
Dressed Beef Values were higher with choice up 0.47 and select up .77. The CME Feeder Index is at 147.85. Pork cutout value was up 1.53.