Morning Highlights


Highlights

  • Chinese Vice Premier Liu He stated that the trade deal between the U.S. and China would not impact China’s other suppliers of agricultural goods. He also stated that Chinese companies will import U.S. goods based on their needs and market conditions.
  • U.S Vice President Mike Pence said last night that discussions for Phase 2 have already begun.
  • The grain markets are all lower overnight due to skepticism from traders regarding whether China will be able to purchase the pledged amount of agricultural goods.
  • The details regarding Phase 1 of the trade deal revealed that China has agreed to purchase an additional $32 billion in U.S agricultural goods over the next two years, and an addition $52.4 billion in U.S energy products over the next two years.
  • China’s agriculture ministry reported a new case of H5N6 avian flu in the western Xinjiang region.
  • As of 7:00 AM: Crude oil down 0.10 at 57.71, Dow futures up 80 ticks at 29,109, and the U.S$ index down 100 ticks at 97.129.                          

 Corn

  • The corn market lower overnight due to pressure from the soybean market and an overall negative sentiment regarding the trade deal.
  • The U.S Senate is expected to vote on the final approval for the new USMCA trade deal today, and then send the deal to President Trump for his signature.
  • Yesterday’s weekly ethanol production report showed that production increased by 33,000 bpd this week to 1,095,000 bpd, the highest production rate for this marketing year.
  • Net ethanol margins were 2 cents lower this week and are now at 11 cents negative.
  • Strategie Grains raised their 2020 EU maize crop estimate from 67.1 million tonnes to 67.2 million.
  • Spreads: H/K 6 ¼ cent carry; K/N 6 ¼ cent carry; N/Z 4 cent carry .

Outlook: The market will trade lower today, following the soybean market.

 Oilseeds

  • The soybean market is a few cents lower overnight after seeing a sell off during yesterdays session following the signing of Phase 1.
  • Soybean prices dropped to an almost one month low overnight due to skepticism that China will make the allotted purchases of U.S agricultural goods that they had promised.
  • Malaysia is currently speaking with the Indian government in order to help resolve tensions and discuss New Delhi’s new palm oil import restrictions. Malaysian palm oil futures were lower for the fourth consecutive session today. The benchmark contract was down 23 ringgits.
  • Open interest for soybeans was up 14,011 contracts, with the May contract up 3,596 and the July contract up 3,187.
  • Spreads: H/K 13 carry, H/N 25 ½ carry, N/X 5 carry

Outlook: Trading lower today as traders are skepticism regarding Phase 1 of the trade deal.   

 Wheat

  • Wheat markets are lower overnight due to pressure from the corn and soybean markets.
  • Strategie Grains cut their 2020 EU soft wheat crop forecast from 140.5 million tonnes to 139.8 million. They also raised their 19/20 EU soft wheat exports from 28.7 million tonnes to 30.5 million.
  • Tunisia has issued a tender for 117,000 tonnes of durum wheat and 100,000 tonnes of soft wheat, the grain can be sourced from optional origins.
  • Japan purchased 117,831 tonnes of food wheat via tender from the U.S, Canada, and Australia.
  • Spreads: Chicago H/K 1 ¼ cent carry; Kansas City H/K 7 ½ cent carry; Minneapolis H/K 9 cent carry.

Outlook: Slightly lower today following the other grain markets, losses will be limited due to supply concerns in the Black Sea region that recently gave the market strength.