Markets Surge Higher on US China G20 Trade Truce
Dec 03, 2018
Good Morning from Allendale, Inc. with the early morning commentary for December 3, 2018.
Grain Markets opened sharply higher in the overnight session due to the favorable feedback from this weekend’s G20 meeting between President Trump and Chinese president Xi Jinping. Both agreed on a 90-day truce on tariffs. President Trump vowed not to boost tariffs on $200 billion of Chinese goods to 25 percent on Jan. 1, as he previously announced. Beijing agreed to buy an unspecified but "very substantial" amount of agricultural, energy, industrial and other products, according to the White House.
For Last Week, March Corn futures up 6.25 cents, January soybeans up 12.25 cents, March wheat up 8.25 cents, soymeal up $2.70 and soyoil up 23 points.
CFTC Commitments of Traders Report showed corn futures sold 14,303 contracts for a new net position of -22,148, soybeans sold 3,616 contracts with a net position of -63,862, wheat sold 765 contracts for a net position of -38,613, lean hogs sold 586 for a net position of 40,323 and live cattle bought 7,953 contracts with a net position of 65,208.
Brazil is expecting to harvest a record soybean crop this season as good weather and strong Chinese demand set farmers on course to produce a new bumper crop. Farmers are on track to collect almost 121 million tonnes this season (1.2% over last year), according to the average estimate of 13 forecasters. Harvesting is set to begin as early as December thanks to a favorable climate in Brazil's agricultural major production areas. Producers may have harvested up to 15% of the soybean areas in Brazil by the end of January (6.3% five-year average for the same month).
USDA Oct Soybean Crush estimated at a record 182.9 million bushels (169.3 million bushels last month) with oil stocks at 1.909 billion lbs. (1.990 billion lbs. last month).
U.S., Canada and Mexico Leaders officially signed the NAFTA 2.0 agreement, which was positive news for the markets. Over the weekend, President Trump threatened to issue the official 6-month notice necessary for the U.S. to withdraw from the NAFTA 1.0 treaty to pressure Congress into approving the NAFTA 2.0 treaty in early 2019. However, the US cannot withdraw from NAFTA 1.0 without legislation from Congress, therefore his threat to cancel NAFTA 1.0 is of limited effect.
Sanderson Farms Inc. announced they will stop using antibiotics vital to fighting human infections to prevent diseases in chickens by this March, becoming the last major chicken producer to stop using the drugs. Sanderson Farms will stop using an antibiotic called gentamicin to keep chicks healthy in its hatcheries and another called virginiamycin in its feed. (Reuters)
China's Agriculture Ministry reported late Sunday a new case of African swine fever discovered in the city of Jiujiang in southern China’s Jiangxi province. China has now reported more than 70 cases of the highly contagious disease since early August.
Dressed Beef Values were mixed with choice unchanged and select down .12. The CME Feeder Index is at 147.13. Pork cutout value was up .68.