Morning Highlights


Highlights                                 

  • China’s statement after the conclusion of trade talks lacked any details but indicated that the two sides have “established a foundation” on key issues. The U.S. statement earlier in the day said China pledged to purchase “a substantial amount” of U.S. products and services.
  • The U.S. Commerce Department will block Huawei from sending some technologies, developed in the U.S., back to China.
  • FOMC minutes revealed that the Fed sees the path ahead as “less clear” regarding interest rates and said they “can afford to be patient.”
  • The U.S. government shutdown is entering its 20th day, with no end in sight. The USDA is extending the deadline to apply for farm aid payments. The original January 15 deadline will be extended by the number of business days that USDA offices are closed due to the government shutdown.
  • The January 11 WASDE report will be delayed due to the government shutdown, even if funding is restored.
  • As of 7:00 am CT, crude oil is down 30 cents to $52.06/barrel, gold is up 2.50 at $1,294.50, DOW down 74 to 23,756, dollar index up 155, and Euro is down 100 pts.

Corn

  • No weekly export sales data with the government still shutdown.
  • Conab somewhat surprisingly raised their Brazil corn crop estimate by 9,000 MT to 91.19 MMT vs 80.97 MMT last year, with first crop corn at 27.46 MMT.
  • EIA weekly ethanol production was down 11k barrels/day to 1.0 million bpd, below the USDA pace and expected to remain weak due to poor margins. Ethanol stocks were up 4 million to 977 million gallons.
  • Live cattle volume hit its highest since May 2017 at 145,000 contracts yesterday, as futures soared to new contract highs.

Outlook:  March futures up ¾ to down 1 overnight..  statements and numbers the market has been waiting for have lacked any substance so far, but we are always one tweet away.

 

Oilseeds

  • Conab estimates the Brazil soybean crop at 118.8 MMT, down from 120.06 MMT last month and 119.28 MMT last year. The average trade estimate was 117 MMT.
  • AgRural dropped their Brazil soybean crop estimate from 121.4 MMT to 116.9 MMT due to extreme heat and dryness in southern Brazil.
  • Canada’s soybean exports to China totaled 1.4 MMT in November, up from 900k MT in October and 532k MT last year.

Outlook:  March beans up ¼ to down 3 ¾ overnight.. Brazil crop estimates are being lowered, but export projections are mostly unchanged. The U.S. soybean carryout estimate is still problematic.

 

Wheat

  • Egypt’s GASC bought 295,000 MT of Russian wheat for Feb 20-28 shipment, and 120,000 MT of Russian wheat for March 1-10 shipment. Lowest price was price was $263.45/MT C&F. U.S. SRW was the cheapest FOB at $239/MT, which puts it at about a $7-10 premium to Black Sea with freight.
  • The Russian Ag Ministry says their grain exports are up 5.1% from a year ago, at 28.2 MMT. Grain inventories are down 19.4% YoY at 42.4 MMT.
  • Chicago wheat March/May spread is averaging 32.98% of full carry, and KC wheat March/May is averaging 43.88% of full carry in the current VSR calculation period.

Outlook:  March KC wheat down 3 ¼ to flat overnight.. Egypt bought more wheat than expected, and Russian offers came back strong. Russia can’t keep this pace up, but they are keeping a lid on prices for now.