Will China Return to US Soybeans?
Aug 08, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for August 8, 2018.
Grain markets are in a bit of a wait and see mode as the USDA report approaches on Friday. The effective date for the latest round of tariffs on Chinese goods was announced continuing the ongoing trade war.
How accurate are USDA's August yield estimates? Rich Nelson did a quick study to find out. Take a look at his findings here.
Reuters poll of average analyst estimates for Friday's USDA Supply and Demand report has 2018/19 corn production at 14.411 billion bushels on a yield of 176.2 bushels per acre. Ending stocks are estimated at 1.636 bb.
Soybean production could be 4.407 billion bushels on a yield of 49.6 bpa according to the average guess. That would push ending stocks to .638 bb. Wheat ending stocks are estimated at .961 bb. The report will be out at 11:00 AM CDT on Friday, and it will also mark the first time that the press will not have a "lock-up" view of the report ahead of its release. Some believe this could add to the volatility on Friday.
Oil World estimates that China may need to resume buying US soybeans in the next few weeks despite the ongoing trade war. The noted that, "the South American supply shortage will make it necessary for China to import 15 million tonnes of US soybeans in October to May."
Brazilian corn exports could fall to 20 million tonnes in 2018, a volume below most analysts' estimates, due to a smaller crop, Luis Barbieri, oilseeds head for commodities trader Louis Dreyfus Company. Speaking at an industry event in Sao Paulo, the executive also noted that concerns related to the cost of freight in Brazil and the uncertainty caused by the trade spat between the United States and China are disrupting forward sales of Brazil's next grain crop. Brazil's government had projected corn exports at 30 million tonnes this year. (Reuters)
Saudi Arabia's state grain buyer, the Saudi Grains Organization, has stated that they will no longer buy wheat sourced from Canada as an ongoing dispute between the two countries continues. Some in trade have pointed out that Canada sent very little wheat to Saudi Arabia to begin with.
Funds were estimated sellers of 4,500 corn contracts and 7,500 wheat in yesterday's trade. They were buyers of 7,500 soybeans, 3,000 soymeal, and 2,500 soyoil.
President Trump will impose 25% tariffs on $16 billion worth of Chinese goods beginning August 23rd, according to the US Trade Representative. This brings the total to the $50 billion of goods first announced by the administration.
On the cattle charts we have resistance at 112.25 from the current peak for the uptrend. Over the previous two days 112.15 held the October fats.
Cash hogs have seen 10 straight days of $1 losses or greater per day. Prices are now 36% under the same price as one year ago using this cash hog metric.
Dressed beef values were mixed with choice down .19 and select up .18. The CME Feeder Index is 150.06. Pork cutout value is down .76.