Highlight of the day was the wheat market…crop doesn’t look good & the market is finally responded to it. EU wheat isn’t good, U.S. wheat has some struggles. Tension once again with China. Shifting away from planting & focus goes to weather & plant growth. Rains of the past few days will help out the crops with upcoming heat. Bean exports were small, but to China.
The Trump Administration sent a formal notice to Congress that it doesn’t see Hong Kong as an autonomous region from China. Politico says that puts Hong Kong’s status as a separate customs territory at risk and opens up Beijing to sanctions.
The move would hurt Beijing but also lessen Hong Kong as an Asian center for business and finance. “I fully expect the U.S. to proceed with sanctions on individuals and entities deemed to be undermining Hong Kong’s autonomy,” says Bonnie Glaser, director of the China Power Project at the Center for Strategic and International Studies. Politico says Beijing recently proposed a “national security law” that would bypass Hong Kong’s legislature and give China more authority to crack down on protests.
What’s next for the U.S. is currently up to President Trump, who hinted at the possibility of sanctions on the Asian nation. China has already vowed to retaliate if the U.S. takes strong actions because of its moves against Hong Kong. Assistant Secretary of State for East Asian and Pacific Affairs David Stilwell says the possibilities include personnel sanctions, visa sanctions, economic sanctions, as well as numerous other options.
The U.S. Chamber of Commerce says any changes to Hong Kong’s status could have serious impacts on the more than 1,300 U.S. companies that operate in the island nation.
Getting a lot of questions about Hong Kong and the assessment & what will happen from that assessment. Will it affect Phase One? Brazil corn on what is being heard. Acre numbers & prevent plant…recent crop progress numbers, no big surprise. Are there some weather worries? Black Sea update with rains & damage. Livestock-where are we at on processing capacity? June cattle moves about the 100-day moving average for the first time in 4 months.
No news was good news from the weekend. No trade issues popping up. Some shorts in the market & not a lot of willing sellers. Scattered rain showers will slow some but welcome rain for others. Some solid weekly exports for the corn but soft for the soybeans. Ethanol…could we be getting back to a new norm with summer driving & ethanol exports could be the wild card? Easier to buy then it was to sell on the livestock. How are numbers from the COF report? Slaughter numbers moving forward. Sam talks about the reason for higher hogs today.
Officials in the Trump Administration are talking positively about China’s commitments in implementing the Phase One trade deal with the U.S. Politico says that’s even as the coronavirus outbreak that began in China is straining relations between the countries.
The deal requires China to make their markets more open, as well as increase its purchases of U.S. farm goods, manufactured goods, as well as energy and services by $200 billion above 2017 levels in the next two years. U.S. Trade Representative Robert Lighthizer says China is working to expand access for U.S. producers.
Ag Secretary Sonny Perdue is also upbeat about the recent steps China took to open its market to U.S. goods like avocados, blueberries, barley, meat, dairy, and forage products. However, officials didn’t release the exact numbers of goods China has bought since the start of 2020. U.S. trade data that came out earlier in May showed that U.S. goods exported to China were actually coming in below the benchmark levels set in 2017. That prompted President Trump to say there was always the option of ending the agreement if China didn’t meet its obligations.
Looking at the frustration of turning the corner on COVID & then a trade war starts picking up. White House puts out 16-page release in regards to China. Will we see counter measures? Is China to be blamed for what is happening globally as we see countries increase pressure on China & China in turn puts tariffs in place. Torpedo’s Taiwan & soybeans. Seasonally tendencies for corn. Heading into a holiday weekend…what tone could we see come Tuesday? Strong bean shipments out of Brazil.
According to three ethanol-industry sources and shipping data, a rare U.S. ethanol shipment will arrive in China very soon. Reuters says that may be the first ethanol shipment to hit China since the two countries struck a trade deal earlier this year.
China recently waived some additional tariffs on almost 700 American products, including ethanol, to support more purchases of U.S. farm goods to help meet its obligations in the Phase One trade deal. Since China made the move, the ethanol industry has been watching for signs of renewed trade in the biofuel. Tariffs on U.S. fuel ethanol were as high as 70 percent after Beijing upped some retaliatory tariffs on U.S. imports in the back-and-forth trade dispute with Washington, D.C.
A slump in fuel demand brought on by COVID-19 led to an oversupply of ethanol that caused prices to bottom out, forcing producers to slash their production amounts. One of the three sources to tell Reuters about the shipment says the vessel was carrying ethanol that originated in the United States and had been resold to China, likely from a seller in Saudi Arabia. A trader based in China tells Reuters that, “People are looking to import fuel ethanol from overseas as prices in northeastern China have risen in the past few days.”
President Trump spoke to the farmers today. How are his comments going to have an effect on the markets today & in the days to come? Is the world starting to turn against China & will it help to straighten things out? Politics involved muddies the waters. Is there some stabilization happening in the ethanol market? The President also suggested not taking beef from other countries. A quiet day in the cattle market. Boxed beef dropped again on the day. Hogs saw a downtrend for a Tuesday.
Analysts already expect China to be unable to meet its obligations under the Phase One trade deal it signed with the U.S. this year. Now, the relationship between the two largest economies in the world appears to be in trouble.
President Donald Trump seemed to add fuel to the fire when he told the Fox Business Network that he has no interest in speaking to Chinese President Xi Jinping right now. He even went as far as admitting the possibility of cutting ties with the Asian nation. Reuters says the U.S. president is very disappointed with China’s failure to contain the COVID-19 outbreak, noting that the pandemic cast a pall over his Phase One deal with China, which was previously hailed as a major achievement.
“They should never have let this happen,” Trump says. “So, I make a great trade deal and now I say this doesn’t feel the same to me. The ink was barely dry, and the plague came over. And it doesn’t feel the same to me.” Trump’s irritation extended to the Chinese president, who Trump one said he had a good relationship with. “Right now, I don’t want to speak to him,” Trump told Fox. “There are many things we could do. We could even cut off the whole relationship.”
Chinese buying soybeans. WASDE on Tuesday. Est for 2020 carryout is 3.3 billion could be a new record. Largest corn crop on record. What about the stocks to use ratio? How will ethanol & feed demand fair? What are the soybean numbers looking like? Lower stocks & carryout for wheat. On the flip side livestock took a hit on a Monday for the cattle. Hogs were lower, but not as drastic as the cattle market.