11/5/18

Morning Commentary - 11/05/2018

CBOT Mixed to Start the Week; Trump/Xi Dinner and USDA Report Ahead

** 6:30 AM CDT CBOT Prices:Jan beans are down 4.25 cents at $8.835, Dec corn is down 1.0 cent at $3.70 & Dec Chi wheat is down 0.5 of a cent at $5.0825.

 ** AgResource AM Grain & Oilseed Comment: Good Morning! It has been a mixed overnight of CBOT trade with corn, soybeans and wheat trading either side of unchanged. Prices initially rallied on the late Friday news that President Trump was hopeful of a trade deal with China. On the weekend it was confirmed that President Trump will be hosting Chinese President Xi at a G20 dinner in Buenos Aries in late November. There is no way of knowing whether this dinner will produce a deal, but US/China trade issues will be discussed at the highest level, with US agriculture hopeful of trade progress.

  The stakes for US agriculture are high with the US likely to demand that China agree to reducing its trade deficit with the US by taking an additional $30-35 Bil of US ag goods which was offered/initially accepted back in May.

This would be a demand boon for US agriculture. Traders understand it’s not only resuming soybean trade, but that China could import large quantities of US grain, meat and dairy products should a deal be reached. Any sustained CBOT sell off will be difficult until after the Trump/Xi dinner.    

  With US farmgate prices known for October and corn/soybean prices under their spring levels, the Farm Bureau is calculating that with an Option Harvest Price Protection policy that farmers would receive payments if their corn yield was 86% and a soybean yield is 92% of their APH – if a farmer took out a HPO policy that protected 80% of their revenue. Of course, most farmers are enjoying yields above their APH, which makes any HOP payment doubtful.  

  US weekly export inspections are estimated in a range of; 17-20 Mil Bu of wheat, 32-37 Mil Bu of corn, and 34-40 Mil Bu of soybeans. The soybean export total could be even be larger based on active Gulf loadings last week.

  South American weather features favorable weather for Brazilian spring planting with near to above normal rains and seasonal temps. There are no issues for Brazilian crops for the next 10 days. However, the Argentine weather forecast holds an abundance of rain which would recharge soil moisture but could catch wheat in the heart of harvest. Quality issues must be monitored for Argy wheat heading into mid-November.

 Saudi Arabia secured 1.02 MMTs of optional barley (excluding Canada) at prices that were deemed as $8-10/MT below current cash prices.

 A two-sided CBOT trade is expected ahead of the USDA Crop report on Thursday.

** Near to Above Normal Rainfall for much of South America: Argentina Turning Wet! 

** Deepening Drought for E Europe and the Black Sea: o 

 

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