1/7/19

Morning Commentary - 01/07/2019

CBOT Mixed to Start The Week on US/China Trade Hope and Threatening South American Weather

** 6:30 AM CBOT Futures Are; March soybeans up 2.00 cents at $9.235, March corn unchanged at $3.83 and March Chi wheat down 1.75 cents at $5.1525.                                               

** AgResource Morning CBOT Comment/Analysis: Good Morning! The first full week of ‘19 has started out mixed to firm with the soy complex rising while corn/ wheat futures ease on this week’s expectation for the index fund re-balance.

  The volume of overnight trade was below seasonal averages as few traders want to take on the market risk of uncertain/political trade negotiations.

  Just over 7,000 contracts of March corn, just over 11,000 contracts of March soybeans, and just over 5,500 contracts of March Chi wheat have changed hands. 

  US and Chinese trade delegates concluded their 1st day of Beijing discussions with reports of active participation with both sides are working together to implement the consensus of both President Trump and Xi. China’s top trade negotiator, Liu He made an appearance which showed he is charge and willing to work for a settlement. The Chinese media reported progress in today’s talks.

The last time that US trade negotiators meet in Beijing was in June with a stalemate as both sides were unmovable in their positions. It appears that time and sliding stock markets have pushed both sides to engage in deeper trade discussions. The US/China trade meetings will conclude up on Tuesday.

 The big questions that traders are pondering is if the meetings are viewed as favorable, will China step forward with additional US ag good demand?

 It’s not only a week of US/China trade discussions, the US will entertain and engage with high level trade discussions this week with the EU and Japan which are likely to include agriculture. USTR has a busy week ahead.

 Pockets of better than expected rain fell on the weekend across Central Brazil with several totals surpassing 2.00”. However, the coverage of this needed rain was less than 20% and the forecast has returned to the December pattern with a high-pressure Ridge across NC Brazil with a deep low pressure vortex across N Argentina. The pattern will produce flooding rains across the northern third of Argentina while soil moisture continues to drop across NC Brazil during the key soy reproductive period. The forecast is threatening, and ARC looks for further decline in total South American crop production.

 The US Gov’t remains partially closed by a lack of funding over the US/ Mexico border wall. This has delayed the USDA Jan crop report indefinitely.

 However, Brazil’s CONAB will be out with their crop estimates on Friday with most forecasting a Brazilian soy crop of 118-119 MMTs and corn crop of 92-93 MMTs

 USDA will release weekly export inspections this AM with US soy shipments pegged at 24-29 Mil Bu, corn at 34-38 Mil Bu and wheat at 14-18 Mil Bu.

 The Index fund re-balance starts Tuesday with selling of the grains and modest buying of soy. We look for a firm week on threatening South American weather.

** EU Monthly Weather Forecast for January for South America Released on Saturday: Brazilian Drought Deepens and Expands

** No Arctic Cold and Limited Snows for Central US Next 10 Days: 

 

 

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