The commodity markets started the week with optimism. Wheat was a leader to the top side in the grains. Russia’s ag minister announced early in the week that Russia would put a 20MMT quota on wheat exports through June 30, 2020. That is about 5 MMT lower than what Russia exported in the last six months of 2019. The Black Sea Region is also experiencing high temps and little rainfall. Helping to set up a possible global wheat supply story. With wheat higher corn also gradually made it’s way higher. Soybeans lagged of all three grains and seemed to be the possible sell side of spreads. Soybeans did catch several sales of soybeans and soybean meal throughout the week.
Unfortunately the optimism started to wane in the commodities when the US and China signed a historic Phase One trade deal. The 8 chapter 94 page deal outlines that China will make a series of changes including opening up it’s market to foreign investment, provide stronger protection for intellectual property and not force transfers of technology to access the Chinese market. The Phase One deal also looks to narrow the trade deficit between the US and China with China importing more US goods. Increases include $77 billion in manufactured goods, $32 billion in agricultural goods, $52.4 billion in energy products and $37.9 billion in services.
While equities, energies and currencies all rallied on the trade deal there were several key points of the deal that agriculture commodities did not like. Including the clause that allows China to buy in a competitive market. Meaning that it is not a captive customer to the US.
USDA has confirmed that farmers will get the final round of MFP payments.
NOPA Crush on Wednesday came in above analysts estimates. NOPA December crush was expected to be 171.6 million bushels and came in at 174.812 million bushels. That’s about 3 million bushels higher than a year ago.
Ethanol Production for the week was up 4.7% to 1.077 mln bbls per day. Ethanol stocks also rose back to the September high of 23 million barrels.
There is some analyst hope that China will buy more US ethanol and DDGS given the country scrapped their own ethanol infrastructure program.
Livestock were mostly mixed on the week as cattle continue to try and push higher. Lean hogs saw limited selling ahead of the trade deal. Following the trade deal livestock futures all moved lower.
The strong selling started in the hogs following the latest export reports that show out of Net Sales of 38,700 MT only 1,900 MT were bound for China.
Live cattle trade in the country fired up on Thursday in Nebraska, Kansas, Texas, Colorado and Iowa. Over 10,500 head traded at a $124 live. Iowa and Nebraska saw dressed trade at $198-$199. That is mostly steady with a week ago. For feeders that are still holding cattle asking prices look to remain at $125-$126 live and $205 in the beef. Tight cattle supplies are expected to run through the first quarter of the year and packers will have pay to keep plants at capacity.
Beef cutouts are not helping packer margin or cattle traders as they continue to stay stagnate and the choice select spread narrows.
Beef Cutout at Midday Thursday
Choice up 0.04 212.57
Select up 1.52 211.19
Choice Select Spread 1.38
Pork Cutout at Midday
Carcass up 0.98 75.63
Bellies up 4.65 104.57
121,000 Friday 121,000 wk ago 117,479 yr ago
33,000 Saturday 33,000 wk ago 24,718 yr ago
492,000 Friday 497,000 wk ago 454,079 yr ago
154,000 Saturday 225,000 wk ago 143,743 yr ago
- Corn up 2 1/2 – 3 1/4
- Soybeans dn 1 up 1 1/4
- Chicago Wheat up 1/2 – 2 1/4
- Kansas City Wheat dn 1/4 -3 3/4
- Live Cattle dn 0.27 – 0.45
- Feeder Cattle dn 0.47 – 0.67
- Lean Hogs dn 0.05 up 0.25
- Class III Milk dn 0.01 up 0.11
Pre-opening Market Broker Commentary
Mark Gold, Top Third Ag Marketing, discusses overnight grains and what the trade may see today.
Jerry Stowell, Country Futures, discusses factors influencing the livestock trade today.
Midday Market Broker Commentary
Mike Zuzolo, Global Commodity Analytics, shares his thoughts on the midday trade factors.
Closing Market Broker Commentary
Closing commentary with John Payne, Daniels Ag Marketing, and Jack Fenske, York Commodities.