1/9/19

Morning Commentary - 01/09/2019

Beijing Trade Talks Conclude on Upbeat Note; GASC Tender Results Awaited; South American Weather Pattern Stuck

** 6:30 AM CBOT Futures Are; March soybeans up 2.50 cents at $9.21, March corn is up 2.50 cents at $3.825 and March Chi wheat is up 5.25 cents at $5.23.

  ** AgResource Morning CBOT Comment/Analysis: Good Morning! US/China trade optimism and a stagnant South American weather pattern are lifting CBOT values overnight. The volume of trade has expanded from the start of the year.

  This will be day 2 of the index fund roll. ARC does not expect that the fund re-balance will have a big impact on closing CBOT values. The rebalance is the only bearish market fundamental offered at the CBOT and traders want to secure any closing softness.

  The US/China concluded trade talks in Beijing and the US participants are returning home. The talks continued an extra day on Wednesday which shows that all wanted to keep the positive momentum going. Official statements from both sides are awaited, but the talks indicate that solid progress was made. Higher level trade discussions are likely to be confirmed in the US in late January.

  Progress was scored in the opening of Chinese markets and in US farm goods and energy purchases to reduce the US trade deficit. China is likely to keep its G20 Argentine promise of large US ag purchases in the wake of the Beijing trade talks. By ARC’s count, China has now secured 5.0 MMTs of US soybeans and new ag purchases are likely to include US grain, pork, cotton and dairy products. China will want to make sure that it looks like it is keeping its r purchase promises as trade negotiations advance.  

  Algeria is said to have bought 550,000 MTs of wheat for Feb/March at prices that average around $261.90/MT CIF. The wheat was said to be secured on an optional origin basis with traders expecting that at least 120,000 MTs of the demand will be filled by US HRW. The CIF price paid by Algeria was the highest in 3.5 years and confirms the rising world wheat market. 

  Also, Tunisia secured 100,000 MTs of optional origin durum wheat at price of $293.65/MT CIF.

  Egypt’s GASC is tendering for late Feb/March wheat and 9 CIF price offers were submitted. Multinational exporters that were absent in prior GASC tenders like Cargill, LDC and Glencore returned with sales offers. 

  The South American weather pattern shows little change over the next 2 weeks with dryness to impact NC Brazil while flooding rains drop across the northern third of Argentina. Crop sizes in both countries are be tugged lower amid the stagnant adverse pattern. Brazil’s CONAB will be out with their Jan soy/corn crop estimates Thursday AM. ARC looks for a soy crop estimate around 118 MMTs.

  Crop threatening South American weather, US/China trade progress and improved world wheat demand are expected to support a CBOT rally today. Wheat looks to be in a technical position to test its December highs at $5.40 Chi.

** Mild with Limited Sows for MO/S IL and S IN: 

 

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