Morning Commentary - 12/05/2018

CBOT Weaker As Bulls Grow Tired Waiting for Chinese Demand; US Gov't Closed on Pres Bush Memorial

** CBOT 6:30 AM Grain Prices: Jan soybeans are down 1.75 cents at $9.10, March corn is down 2.00 cents at $3.8275, and Mar Chi wheat is down 5.00 cents at $5.175.

 ** AgResource Morning CBOT Comment/Analysis: Weaker are CBOT price trends as concern persists that China will not lower their retaliatory tariffs against US ag goods. US equity prices fell sharply on Tuesday amid the fear that any US/China trade truce was fragile. US President Trump tweeted that he is the “tariff president” if the US/China are not able to come to a deal in the next 90 days. Overnight, China stated that expects it will be able to reach a deal.

  China also commented that it will adhere to any interim trade deals negotiated in Buenos Aries with the US. Whether this means that China will secure large amounts of US farm goods is uncertain since China has not mentioned in its media reports that negotiations included US agricultural goods. US crude oil will be sought, but outside of a potential 5 MMTs of US soybeans to be purchased by state buyer Sinograin for their reserve, no other mention of additional Chinese ag demand is rumored or noted.

  And it appears that the timing of any purchase of US energy or soybeans is between now and March 1st when a trade deal must be substantially completed.

There likely will be trade talk extensions, but progress must be shown.  

  Egypt’s GASC is failing to open letters of credit on 945,000 MTs of wheat impacting deliveries from late November into late December. ARC reported last week that GASC had problems opening LC’s on 6-7 cargoes of wheat, but the latest news expands the issue with Egypt telling exporters that they should expect to delay of 16 cargoes into January.

  Egypt will have to draw from its own wheat stocks, but Egypt’s financial resources are said to be the best in years and traders are dumbfounded by the news. The US and world wheat markets will retreat on the news that the world’s largest wheat importer is taking a 30-45 day hiatus on accepting shipments. 

  The USDA and all US Gov’t agencies are closed today for President Bush’s funeral. The FAS weekly export sales report will be delayed until Friday.

  USDA Sec Purdue said that he is waiting on the White House to sign off on a second round of payments thru the Market Facilitation Program late in the week

  The CBOT is growing tired of waiting for immediate/large US ag purchases from China, and a corrective session is expected as the bulls bank profits.




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