Morning Highlights


Highlights

  • China and the US agreed to a phase one deal on tariff reductions. China pledged to boost ag purchases to $40 billion.  The biggest year ever of Chinese ag purchases was in 2013 at $29 billion.

  • There is no clarity yet on whether China will lower or eliminate current tariffs on ag products.  They are only suspending the additional increases that were scheduled to take effect December 15th.  

  • Mexico is pushing back on the USMCA after the US insisted upon tracking and compliance to labor laws.  The version sent to Congress had that provision in, while the draft signed by Mexico did not contain that language.   

  • Outside markets as of 7:00 AM Central: January crude oil $60.08 up $0.01 per barrel; gold at $1,478.80 up $0.20; DJIA at 28,135 up 3; US Dollar Index at 96.965 down 0.207.

     

Corn

  • Corn is higher in overnight trade in reaction to Friday’s agreement with China on tariffs.

  • It is believed that ethanol will count as an ag product and count toward the $40 billion of annual Chinese ag purchases.

  • The new Argentinian government raised taxes on corn from 7% to 12% as expected.

  • Spreads: H/K 6.5 cent carry; K/N 5.5 cent carry; N/U 2 cent inverse; U/Z 1.75 cent carry.

     

Outlook:  5-6 higher on trade optimism

 

Oilseeds

  • Soybeans at sharply higher in the overnight session on the phase one agreement.

  • NOPA crush is due out today and a record November crush of 172 million bushels is expected.

  • The new Argentinian government raised taxes on soybeans from 25% to 30% as expected they would upon taking power. 

  • Widespread rainfall hit the majority of Brazilian growing regions over the weekend.

  • Spreads: F/H 14.25 cent carry; H/K 13.75 cent carry; K/N 12 cent carry; N/Q 3.75 cent carry.

 

Outlook: 8 higher on trade optimism

 

Wheat

  • The new Argentinian government raised taxes on wheat from 7% to 12% as expected.

  • European analytics firm APK-Inform said Ukrainian wheat acreage will be down 10% due to extremely dry fall weather, but they did up their export forecast very slightly.  

  • Russian wheat prices are slowly rising as farmers have slowed sales coupled with a strengthening rouble.  

  • Spreads: Chicago H/K 2 cent carry; Kansas City H/K 7.75 cent carry; Minneapolis H/K 8.25 cent carry.

 

Outlook: 8-12 higher on trade optimism