AgriVisor Afternoon Marketwatch

Thursday, December 06, 2018

***** Corn ended 1-2 lower, soybeans 3-4 lower; Chicago wheat mostly 2-3 lower. *****  

   # Emotions surrounding the U.S. China agreement got snarled by an arrest in Canada of a top Huawei executive(CFO) for extradition to the U.S. The arrest is tied to their alleged violation of U.S. sanctions on Iran. That hit a broad sector of markets to start the day.
   # At days end though, the trade still expects China to buy goods from the US, with soybeans and LNG being mentioned most. News leads us to believe the soybean purchases will be for govt. reserves bypassing the tariff issue. The 5 mmt. number continues to surface, although we've seen no formal commitment. 
With negotiations set to begin in Washington later this month, we'd expect at 
least some initial "good faith" buys soon.
   # There was some talk today about the potential change in China/US 
Relation, better soybean prices, leading to a change in producer planting 
attitudes for 2019. Still, there's still a lot of time for planting decisions to change, especially with less fall field work completed due to weather. 
   # Reuters put out estimates for next week's USDA s/d reports. Corn stocks 
are expected to be 1.738 bln. bu., up 2 mln., soybean stocks 945 mln. bu., 
down 10, and wheat stocks at 956 mln., up 7.  Look for world numbers in 
individual commodity comments
   # Stats Canada put out their latest crop estimates this morning; all wheat 
31.769 mmt(neutral), canola 20.343 mmt(slightly friendly), barley 8.380 
   # CONAB will have new Brazilian numbers out next week, but at this point, we doubt significant change, although soybeans could be revised up. 
   # Brazilian farmers in the north are somewhat excited for 2nd crop corn. 
The early soybean plant is expected to lead to early harvest, allowing the 2nd crop corn to be planted early this year too. That could pull the key 
development period forward, helping avoid the yield drag the dry season 
causes at the end. 
   # Egypt had a wheat tender overnight.  The offers we saw this morning were 
for Russian, Romanian, and Ukraine wheat. They bought 350,000 tons, all from Russia and Ukraine, mostly the former. After last week’s rally, US prices were a little too high to compete.  Egypt has started to issue payment for ships showing up at port with wheat cargoes.
   # USDA did report 198,120 tons of corn were sold to Mexico.
   # There was an increase in deliverable tenders being made at the CBOT. 69 
corn tenders were issued, with 140 tenders for wheat. The 758 soyoil 
continues to wind down redeliveries.  The corn deliver date was through June 
28, meaning there are a lot of old open positions yet. The increase in corn and wheat tenders weighed on the Dec/Mar spreads.
   # Arg. weather will be dry into the weekend, some showers on Sunday, but 
dry again to start next week.  Temps will slowly lift to warmer than normal. 
Southern Brazil will have a similar pattern. Shower activity will persist 
across northern Brazil, with temps slowly lifting to warmer than normal 
   # Export sales are out in the morning; the trade is looking for 600-850,000 tons of soybeans, 900,000-1.1 mmt. of corn, and 400-600,000 tons of wheat. 
   # The detention of Huawei's CFO sent tensions through the equity and 
financial markets overnight, causing some to questions whether the US/China 
thaw might have been short lived. Signs of weakening economies have 
been a drag of recent, of which the monthly trade deficit was another event coming in at the widest this decade. Crude oil markets are down in sympathy with stocks, although the absence of an OPEC announcement worked against oil.  It’s thought OPEC is going to cut output, but they are waiting to see if Russia agrees to scale back as well. 

***** Live cattle ended $0.40 to $0.62 lower; feeders $1.10 to $1.40 lower; hogs $0.85-$1.00 lower. ***** 

   # Wholesale beef was a little softer, on moderate volume.  Choice ended at $212.67, down $0.59. The live trade was moderate, but prices slipped with live at $115 and dressed at $183. The soft undertone in the wholesale market is having an impact, especially if tomorrow’s export number is still weak.  
   # Wholesale pork prices were slightly firmer, with the #2 cutout ending at $72.12. The volume of trade was reasonable, but not exceptional. Cash hog prices continue to remain soft, with packers finding plenty of animals to choose from even though packer margins are very good. News of lax passenger screening of people coming in from countries with ASF quickly triggered a wave of futures profit-taking.  Lack of news on the China front may be an issue, especially with the premium futures are commanding.