The Hueber Report

While there was no “official” breakthrough in the U.S/Chinese discussions this week, there were smiles and handshakes all around (no hugs that I am aware of) which was enough to give the grain and soy markets a little boost in the overnight trade.  Reportedly, China did offer to purchase another 5 MMT of beans (over time), which is a nice gesture but evidently, nothing will be confirmed until additional discussions have been held.  As it stands right now, Treasury Secretary Mnuchin and lead negotiator Lighthizer will travel to China in mid-February to try and hammer out detail so President Trump and President Xi can meet then before the March 1st deadline when additional tariffs are set to be implemented.  

 

I believe the equity markets were more elated about the potential breakthrough than the grain/soy trade as they pushed into higher highs for the year once again.  Interestingly enough, that did not appear to help global freight markets.  Last week I had commented about the negative action in the Baltic Dry Freight market, which seems to be reflecting the slowdown in the global economy and since that time, this market had nose-dived and reached down to levels not traded since 2016.  Maybe the fears of ancient mariners were well founded as indeed if you sail far enough, you can reach the edge of the world and fall off.  

Most of the other ag-specific news is sparse this morning.  The Buenos Aires Grain Exchange bumped up its corn estimate for Argentina by 2 MMT to 45 MMT and the Russian consultant group, SovEcon raised their estimate for the 2019 Russian wheat crop by 2.7 MMT to 80 MMT.  

 

I guess that means we have another week to twiddle our thumbs as we await the USDA reports on the 8th.  I have been receiving emails from the various news wires asking for updated estimates, so there could be some revisions from the survey taken last December, but I suspect most changes would be in the South American crops.  For now, here were those previous figures; US Corn production 14.532 billion derived from a yield of 177.7 bpa.  The carryout was expected to drop from the December estimate of 1.781 billion to 1.673 billion bushels.  Bean production was estimated to be 4.583 using a yield of 51.9 bpa.  This was projected to leave us with ending stocks of 930 million, which would have been a drop of 25 million from the December estimate.  Wheat ending stocks were expected to have remained unchanged at 974 million.