Traders Watch For Chinas Next Move
Dec 17, 2018
Good Morning from Allendale, Inc. with the early morning commentary for December 17, 2018.
Grain Markets closed the session mixed with January soybean futures dropping 6.5 cents on traders reacting to smaller-than-expected soybean purchases by China and massive global soybean supplies. Corn futures firmed on news China will start buying additional corn from the US as soon as January. Last week, march corn futures were down 0.75 cents, soybean futures down 16.5 cents, wheat futures down 2.75 cents, soymeal down $4.10 and soyoil down 28 points. Traders will continue to focus this week on additional export sales, trade news and South American weather events.
CFTC Commitments of Traders Report showed funds bought 44,872 contracts of corn futures for a net position of 98,617, 6,525 soybean contracts for a net position of -11,068, 6,005 wheat contracts for a net position of -22,402, 3,261 live cattle contracts for a net position of 75,524 and funds sold 3,563 for a net position of 35,806.
Trade today is looking for NOPA November soybean crush at 168.44 million bushels (163.55 mb last year, 173.1 mb last month). Soybean oil stocks expected at 1.504 billion lbs (1.326 last year, 1.503 last month).
China’s National Bureau of Stats reported 2018 Chinese corn crop down 1.7 million mt to 257.3 million mt (259 mmt in 2017, 264 mmt in 2016, 256 USDA estimate). On this news, Bloomberg reported China is preparing to restart American corn purchases in January (3 million mt).
Brazil Ag Minister, Blairo Maggi, said they are prepared if China removes tariffs on U.S. soybeans, which had driven down U.S. prices and driven up prices paid for Brazilian soybeans. "Brazil is absolutely prepared. ... The withdrawal of the tariffs there in China for American soy won't have any influence. The market will return to its normal baseline where it was before, or very close", Maggi said.
US Agricultural Secretary Perdue, in an effort to calm rumors that the USDA will not pay a 2nd tranche of soybean payments, predicted more farm aid payouts despite China’s recent soybean purchases.
Egypt's GASC is seeking at least 30,000 tonnes of soyoil and 10,000 tonnes of sunflower oil. The agency will also accept offers of at least 10,000 tonnes of soyoil and 5,000 tonnes of sunflower oil in Egyptian pounds.
China pork prices are likely to climb in 2019 due to tight supply caused by the further spread of African swine fever, said an official at the National Development and Reform Commission. "If the outbreak of African swine fever can't be effectively controlled or even further spreads after the Chinese New Year, pork will be in short supply as farmers won’t be willing to replenish their herds," Lu Yanchun, head of the Chinese price monitoring center.
Dressed Beef Values were mixed with choice down 1.51 and select up 2.14. The CME Feeder Index is at 146.91. Pork cutout value was down 1.37.