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Trade Optimism Ahead of Long Weekend

Published on: 03:16AM Jan 18, 2019

Good Morning from Allendale, Inc. with the early morning commentary for January 18, 2019.

Grain markets continue the back and forth of deal or no deal in the trade dispute between the US and China. In honor of Dr. Martin Luther King Jr., markets will not open Sunday night or during Monday's day session. They will resume normal trade with Monday nights 7:00 PM CST open.

The Wall Street Journal reported on Thursday that U.S. Treasury Secretary Steven Mnuchin discussed lifting some or all tariffs imposed on Chinese imports and suggested offering a tariff rollback during trade discussions scheduled for Jan. 30. Rumors have also swirled on Twitter that China has made additional US ag purchases and that they have plans for many more.

South American weather continues to be monitored closely. World Weather, Inc. stated, "Brazil crop conditions are varied. Those in the northeast are deteriorating daily and the trend will continue because of dryness. Crops elsewhere have stayed in mostly good shape recently, although the southwest is drying out. Some rain will fall in the southwest Friday and Saturday offering a temporary respite from developing stress, but the drying bias will resume late in the weekend through all of next week."

How will export competition change if the weather doesn't improve in South America? How is the US government shutdown impacting the commoditiy market's ability to discover pricing? Two great questions Rich Nelson addressed in a recent free webinar. Check it out here.

The Buenos Aires Grains exchange lowered Argentina's 2018-19 soy plantings estimate to 17.7 million hectares (43.7 million acres). Their previous estimate was 17.9 million, and too much rain was cited for the decrease.

Strategie Grains slightly cut its forecast of European Union wheat from 147.0 million tonnes to 146.4 million. The revised number is still 15% above last year's total.

Managed money funds were thought to be buyers of 23,000 corn contracts, 10,000 soybeans, 6,000 wheat, 3,500 soymeal, and 4,500 soyoil in yesterday's trade.

With the US government shutdown, and a US/China trade deal still pending, facts and data are hard to come by. In less than two weeks, we will share our full outlooks for grains, oilseeds, and livestock in a convenient webinar format and include a full weather outlook from Drew Lerner of World Weather, Inc. We begin with weather Tuesday, January 29th and conclude with livestock January 31st. Get registered and get the facts.

The Lean Hog Index, the measure of nationwide cash hogs that futures are settled against, has appreciated 4.91 off the winter lows posted on December 27. A rally is normal at this time of year.

Cash cattle bids were noted at $125 against $127 asking prices. Last week's average was $124.

USDA's Agricultural Research Service and the Beef Checkoff recently published their study on the environmental impact of beef cattle on the environment in the journal Agricultural Systems.  Greenhouse gas emissions from beef production was only responsible for 3.3% of all emissions, below the 14.5% commonly used figure.

Dressed Beef Values were higher with choice up .57 and select up .70. The CME feeder index is 143.09.  Pork cut-out values were up .46.