All Members: Morning

CBOT Recovers on News that US/China Trade Teams to Meet in Washington DC Next Week

Feb 15, 6:48 am | Morning Commentary

** 6:30 AM CBOT Futures: Mar soybeans are up 4.00 cents at $9.075, Mar corn is up 1.0 cent at $3.7575 and Mar Chi wheat is unchanged at $5.07.

 ** AgResource Morning CBOT Comment/Analysis: Good Morning! Mostly higher in the summer row crops and mixed in wheat has been the overnight CBOT trade.

There has been heavy volume trade in corn with over 32,000 contracts changing hands in March futures. The US wheat market is easier on technical selling tied to Thursday’s weak close and further weakness in Paris wheat futures with their May futures contract down 2.00 euros/MT at $197.50.

  The USTR Trade delegation is heading back to Washington after fresh progress was scored in trade talks in Beijing this week. Ambassador Lighthizer and Sec Treasury Mnuchin met with China’s President Xi late Friday. The good news is that the trade talks will continue in Washington next in a sign that both sides want to reach a deal sooner than later.  

  The US wants to get negotiation framework far enough along such that President Trump can meet with Chinese President Xi in March to flesh out the remaining hard-fought structural points. In the end, the US will push on all fronts but, its up to President Trump to decide in a trade deal with China benefits the US more than the continuation of tariffs? The US nor Chinese will get everything they want in a trade deal, but US President Trump will not want to carry this trade issue forward into the ‘20 US Presidential election cycle.

  The US Gov’t is closed for the President Day holiday on Monday, but it’s expected that US/China trade negotiations will resume Tuesday and continue into Friday. Amid the long weekend and China’s trade team returning to the US, the risk is to the upside in the markets as positive President Trump comments.

  Russian fob wheat offers slid another $.50/MT on Friday with offers at $242.50/MT. The weakness in Russian fob wheat price is said to be from several longs looking for new demand amid a slumping ruble. Interior Russian wheat prices have not fallen nearly as much and replacement for the export sellers will find them losing around $10-11/MT on higher interior cash bids. This leads ARC to believe that the Russian fob wheat decline is temporary.

  A newswire is reporting that a drought and army worms could force India to grant duty free corn imports. Total Indian corn imports are estimated in a range of 500,000-1.5 MMTs in coming quarters.

  The South American weather forecast is generally favorable with the overnight models calling for better rains across Argentina in the 8-10 day period. Otherwise, Brazil will see normal rainfall and temperatures into March

  US/China trade optimism with the potential of doubling ’17 US ag demand should underpin CBOT values with new US/China talks planned next week.

** There is no change in the North American Weather Pattern For The next 3 Weeks; Flooding to Worsen in the Delta/SE US:

 

CBOT Lower, but US/China Trade News Spurs Deal Optimism in March

Feb 14, 6:50 am | Morning Commentary

** 6:30 AM CBOT Futures: Mar soybeans are up .50 of a cent at $9.17, Mar corn is down .5 of a cent at $3.785 and Mar Chi wheat is down 3.50 cents at $5.1875

** AgResource Morning CBOT Comment/Analysis: Good Morning! The overnight CBOT trade has been low volume and mixed overnight. Optimism from the US/China Beijing trade negotiations is offering support while producer cash sales and declining Black wheat prices caps rallies. A firm day is expected as traders will not want to be heavily short heading into a long US holiday weekend.

  The US weekly export sales report for the week ending January 3rd will be released this morning with next week being a “data dump” of US weekly export sales from January 10th to February 14th. This will get US export sales totals up to date. The release will occur during the USDA Annual Outlook Conference that will be held in Washington, DC.

  China announced 7.38 MMTs of all origin soybean imports during January. This was above ship line-up forecasts and is considered slightly bullish. The yearly total is down 13%, but much of that is already being reflected in USDA’s 88 MMTs 2018/19 China soybean import forecast.  

  China Jan total goods exports rebounded 9.1% from a year earlier to $217.6 Bil dollars while imports fell 1.5% to $178.5 Billion. The data argues that China’s economy should stabilize amid the fresh Chinese momentary stimulus. 

  US/China trade talks are scoring solid progress which is pleasing US President Trump. Bloomberg is reporting that President Trump is considering a 60-day extension of the existing tariffs, while other media sources argue that President Trump and Chinese President Xi could hold a trade summit in Florida during March. In fact, USDA Deputy Sec Censky speaking at the National Ethanol Conference yesterday indicated that there is a good chance that US President Trump and Xi will hold a US/China March Trade Summit to strike a final deal.  

  The buzz over the amount of US ag import dollars that China is pledging to secure annually is starting to make the rounds. Most see the total in a range of $35-45 Bil. This would be massive for US agriculture and likely increase the US’s share of China soybean imports, but also include huge amounts of US corn, wheat, ethanol, DDGs, sorghum, dairy products and meats. Note that in 2017, China booked just $19.7 Bil of all US ag goods, so a potential doubling of demand would be extremely bullish for US agriculture.  

 The political pressures are building for the Trump Admin to end tariffs on Canada/Mexico steel/aluminum for both countries to ratify the USMCA. Canada has political elections in 2019 and their legislative calendar is tight to ratify the pact. Neither country will vote until US tariffs are removed.

  ARC doubts that CBOT breaks can be sustained amid US/China trade optimism. 

CBOT Mixed Awaiting News on US/China Trade Talk Progress

Feb 13, 5:38 am | Morning Commentary

** 6:30 AM CBOT Futures: Mar soybeans are down .50 of a cent at $9.07, Mar corn is down .5 of a cent at $3.78 & Mar Chi wheat is up 1.50 cents at $5.215

** AgResource Morning CBOT Comment/Analysis: Good Morning! It has been a low volume and mixed CBOT trade overnight. Corn, soybeans and wheat futures have traded either side of unchanged as the marketplace awaits news on US/China trade talk progress.

  Asian equity markets pushed to strong gains on US/China trade hopes with the Shanghai Index up nearly 2% while Nikkei gained 1.3%. US Dow futures call for a 50-point higher opening while the value of the US dollar is slightly higher.

  The delayed CoT report as of Jan 15th showed that managed money was short 16,000 contracts of Chi wheat (down 500), short 27,500 contracts of corn (down 50,000), short 21,000 contracts of soybeans (up 19,000 contracts), short 48,000 contracts of soyoil (down 2,000) and long 11,000 soymeal (down 15,000). 

  There were rumors in the CBOT marketplace that China was checking prices of US fob corn and ethanol values, which is leading some to speculate that the next US ag goods that China could secure is corn – not soybeans. China has already booked 10 MMTs of US soybeans as US/China trade negotiations stepped forward. Traders are wondering if corn could be the next US ag good if new progress is scored in Beijing this week?    

  US President Trump is deciding whether to accept the Congressional offer on a new US budget that includes 55 miles of funding for a wall. No decision has been rendered, but should the Congress approve it and send it to the President for his signature, its important to note that a Bill of US Tax Extenders – including the US biodiesel subsidy was not included in this Budget pact. This is leaving US biodiesel producers concerned as the bill would have to be attached to other legislation which would have a diminished chance of passing.

  The South American weather forecast offers near to above normal rains for across Brazil while sunny/mild weather persists across Argentina. Concern is starting to emerge for dryness across the southern half of Argentina. Near to slightly above normal temps are forecast for Brazil and Argentina.
Arctic cold will be sliding south and east into the Central US in the 6-12 day period that poses a winterkill risk to KS/NE winter wheat with minimum temps to slide to the single digits. The cold will be some 20-25 degrees below normal and cause elevated worry for poorly established Plains HRW wheat.

  Jordan and Bangladesh have offered new tenders for world wheat while US corn demand remains stout from Mexico and South Korea. Russian wheat prices have slipped to $245-246/MT amid lackluster export demand.

  Its another day of waiting on US/China trade talks and news of progress.

** Winterkill Risks for HRW wheat Next Week With Arctic Cold:

** Snows Miss W Plains Wheat Areas: 

** Southeast US to Endure Flooding Rains: 

 

A Week of Trading Politics at the CBOT; Brazilian Soybean Harvest Gains Speed

Feb 11, 6:58 am | Morning Commentary

 ** 6:30 AM CBOT Futures: Mar soybeans are down 1.00 cents at $9.1350, Mar corn is down .50 of a cent at $3.7375 and Mar Chi wheat is down 3.25 cents at $5.14

** AgResource Morning CBOT Comment/Analysis: Good Morning! The week has started out mixed and in low volume at the CBOT. The February USDA Crop Report is being traded outside of the US while the Trump Administration is contemplating another shutdown as Congressional negotiations on the Budget Pact (and the Wall) have stalled. A deal needs to be reached by Friday or the US Gov’t could go back into furlough. President Trump could invoke emergency powers to fund his US/Mexico border wall before a second lasting shutdown.

  Also, in high drama, the US/China trade teams have held a day of meetings in Beijing to work out a trade pact. World equity markets have high hopes for progress with the Shanghai Index gaining 1.4% following their Lunar New Year holiday. Asia has reopened for business following the week long holiday.

  Trade negotiations always goes down to the final hour before a deal is reached. We expect nothing less from the US/China in coming weeks. ARC is optimistic that a deepening trade war can be averted and that enough progress will be scored to keep the negotiations going past March 2nd without an increase in tariffs. Should that occur, we expect that China will have to pledge to secure additional US ag and energy goods as a sign of good faith to keep tariffs at current levels.

  Indonesia is reported to have secured 60,000 MTs of US wheat in the past week with additional interest noted. Its expected that Indonesia booked SRW wheat – the cheapest wheat in the world. Indonesia does not allow corn to be imported to protect its own domestic producers, so there has been a big leap in wheat imports with much of the wheat turned into livestock feed.

  South American weather forecasts are favorable with near to above normal rain for the entirety of Brazil while Argentina enjoys needed sunshine and drier weather conditions. Temps across Argentina look to average out to near to below normal, which along with adequate soil moisture favors filling corn and blooming soybeans. There are hints for the return of the December/January weather pattern in the closing days of February and March, but confidence in such an extended forecast is low. ARC advises clients to monitor the forecasts

  US weekly export inspections for the week ending February 11th are expected to show; 16-20 Mil Bu of US wheat, 37-43 Mil Bu of soybeans, and 34-39 Mil Bu of corn. China continues to rapidly ship out its soybean purchases.

  The Brazilian soybean harvest has reached 26% completed vs the 5-year average of 12% according to Brazil’s AgRural. Yields are extremely variable.

   Its another day of choppy CBOT trade awaiting US/China trade developments. Don’t sell breaks or buy strong rallies. 

 

CBOT Awaits the February USDA Crop Report this Morning; GASC in for World Wheat and US should Sell 120,000 MTs

Feb 8, 7:14 am | Morning Commentary

** 6:30 AM CBOT Futures: Mar soybeans are up 1.50 cents at $9.1475, Mar corn is up 1.50 cents at $3.78 and Mar Chi wheat is up 2.50 cents at $5.1575.

** AgResource Morning CBOT Comment/Analysis: Good Morning! It’s a USDA Crop Report Day with the much-anticipated NASS Final Crop data, December 1st Stocks Report & US winter wheat Seeding Report out at 11:00 AM CST. 

  Overnight CBOT trade is slightly higher in a modest recovery of yesterday’s sharp fall due to US/China trade concerns. USTR is expected to release meeting dates and times this morning for the Beijing meetings next week. The recent communication pattern from Trump Administration officials has been to “bad mouth” trade talk progress and the coming meeting to help their negotiating position. Making this month’s trade positioning worse for the marketplace is the hard deadline of March 2nd and fear that US tariffs on $200 Bil of Chinese goods would rise from 10% to 25%.   Trade negotiations always goes down to the final hour before a deal is reached. We expect nothing less from the US/China in coming weeks.

  Egypt’s GASC used Thursday’s world wheat market decline to tender for late March shipment. 12 world exporters offered wheat from Russia, France, Eastern Europe, the US and Argentina. US wheat is the cheapest in the tender offer at $235/MT fob and including freight of $25/MT it is the cheapest source of supply at $260.50 cif.  French wheat would come in 2nd at around $262.20 cif. The tender should be filled by 120,000 MTs of US SRW wheat with the remainder being French wheat. This is supporting an early CBOT wheat rally. s

  South American weather forecasts are favorable with near to above normal rain for the entirety of Brazil while Argentina enjoys needed sunshine. Temps across Argentina look to average out to near to below normal, which along with adequate soil moisture favors filling corn and blooming soybeans. There are hints for the return of better Argentine rains in the 9-15 day forecast period and Brazilian crop sizes will stabilize while Argentina improve. This year’s South American harvest will be far better than last year when a dire drought hit Argentine soybean/corn production.

  Newly elected Brazilian President Bolsonaro will visit Washington DC next month to tighten his ties with US President Trump. A big discussion topic will be US ag trade and the opening of Brazilian markets. The US trade team in Brasilia this week made considerable progress on; US wheat, ethanol and pork.

   For the week to date, CBOT corn is down 1 cent, Chi wheat is down 9 cents with soybeans down 2 cents. Good luck with the USDA February report today, its likely to hold several surprises.

  AgResource research looks for the USDA report to be supportive of corn/wheat and slightly bearish of soybeans. Yet, a US/China trade deal is needed to finally lift the bearish overcoat from CBOT prices starting in March.

** Snows Favor Great Lakes with Additional Precip for S Midwest/Delta: 

 

 

CBOT Prepares for USDA’s February Crop Report; US Soy Futures Market Reaction Disappointing to 5 MMTs of China Demand

Feb 7, 6:45 am | Morning Commentary

** 6:30 AM CBOT Futures: Mar soybeans are down 1.50 cents at $9.2025, Mar corn is down .75 of a cent at $3.7925 & Mar Chi wheat is down 4.50 cents at $5.215

** AgResource Morning CBOT Comment/Analysis: Good Morning! Slightly lower has been the overnight CBOT trade as the industry prepares for Friday’s dump of data including CONAB’s Brazil’s crop production estimates and the delayed USDA January Crop, Stocks, and Seeding report that was supposed to be released a month ago. The key USDA report will be out at 11 AM CST, and it promises to move CBOT prices – at least temporarily.

  CBOT corn, soybean and wheat values have been trading in a range since late 2018. A lack of USDA data has contributed to the sideways tow of price, but more important is that uncertainty surrounding US/China trade and whether a deal can be completed? Next week the USTR trade team will be heading to Beijing for additional meetings and hopes are high for new progress.

Its US/China and USMCA trade progress that will break the CBOT out of their ranges as traders get back to trading fundamentals – not politics.   

  US Undersecretary for Trade Ted McKinney and USTR’s Chief Agricultural Trade Negotiator Greg Doud have been in Brasilia this week to push the new Bolsonaro Administration to honor Brazil’s commitment to secure US wheat, and to lower ethanol tariffs and lift their ban on US pork imports. For the past 2 decades Brazil has looked past its agreement with the US to secure wheat. Its hoped that progress was scored, and that Brazil will no longer slap a 20% import tariff on US ethanol once imports surpass 600 Mil liters.  

  China’s demand for US cash soybeans slowed dramatically late Wednesday as its 5.0 MMTs purchase promise was secured. ARC looks for a modest FAS sales announcement to China this morning, but its interesting to note that since the new 5.0 MMTs purchase was announced Thursday afternoon, CBOT March soybeans have only rallied 5 cents/Bu. The response of the marketplace is disappointing

  South American weather forecasts are favorable with near to above normal rain for the entirety of Brazil while Argentina enjoys needed sunshine. Temps across Argentina look to average out to near to below normal, which along with adequate soil moisture favor filling corn and blooming soybeans. There are hints for the return of better Argentine rains in the 9-15 day forecast period

  The USDA Weekly Export Sales report will be out this AM with data for the holiday period. Sales totals are not expected to offer new market inspiration.

   The CBOT is prepared for a bullish USDA grain report on Friday. Most expect a dip in US corn/soybean yields and 500-700 Bu decline in US Dec corn stocks. However, it’s a US/China trade deal that will define CBOT price trends in the months ahead. Making up 480 Mil Bu of lost US soybean exports is impossible.

** Big Temperature Differences, Heavy rain for SC Midwest, and Snows for IA/WI: 

 

CBOT in Waiting Mode for Friday’s USDA Report; Expect Another Back and Forth Day

Feb 6, 6:53 am | Morning Commentary

    ** 6:30 AM CBOT Futures: Mar soybeans are unchanged at $9.2025, Mar corn is unchanged at $3.8075 while Mar Chi wheat is up 1.25 cents at $5.2825.

   ** AgResource Morning CBOT Comment/Analysis: Good Morning! Little changed and low volume has been the overnight trade at the CBOT. Corn, soybeans and wheat are holding near unchanged amid a lack of news, and the risk/uncertainty surrounding the February USDA Crop report. The inclusion of the January data and the 2-month lag time since the last USDA WASDE report will cause the February report to define CBOT winter price trends. Amid a lack of fresh news and the Asian Lunar New Year holiday, it’s a waiting game until Friday.  

 The CFTC updated trade positioning as of January 31st in an interim report. Managed money was net short 32,000 contracts of Chi wheat, 18,000 contracts of soybeans, and 60,000 contracts of soyoil. Funds were net long 56,000 contracts of corn and 5,500 contracts of soymeal. 

President Trump in the State of the Union Speech defended his trade policy and called on Congress to approve the USMCA (previously called NAFTA). He went farther to suggest that the US is scoring progress in negotiations with China but argued that strict adherence to an IP protocol is demanded to protect US workers. Hard work lies ahead before a US/China trade deal can be inked.

  Lastly, President Trump pointed out that recent passing of the Farm Bill is what is possible when both parties work together in a bipartisan manner.

  South American weather forecasts have improved with better rains for the entirety of Brazil while Argentina enjoys needed dryness/sunshine. Temps across Argentina look to average out to near to below normal, which along with adequate soil moisture favor filling corn and blooming soybeans. There are hints for the return of better Argentine rains in the 9-15 day forecast period

  FAS should finish up announcing US soybean sales to China in their latest 5 MMTs purchase pledge. The cash buying slowed down late yesterday. China’s US purchase has reduced Brazilian interest and basis levels are slipping as the harvest progress quickens. China’s purchases of US soy for the summer helps confirm that China is “full of beans” nearby amid reports of worsening ASF infections. Even Japan has culled 15,000 hogs due to a worsening outbreak.

  Russia’s ag minister indicated that the country has enough grain to meet domestic demand, and that exports would slow down due to high prices. In 1-3 months, Russian grain prices should start to decline amid the pending new crop. The ministry estimated 2019 Russian grain production at 118 MMTs.

  The US ag markets are anxiously awaiting Friday’s USDA Feb Crop report. Thereafter, its US/China trade negotiations and whether a deal can be cut that opens China’s marketplace? Our bet is for another 2-sided CBOT trade today.

** Massive Temperature Deviations; NW North America Bitter Cold; Warm SE US

** More Snows for WI/MI with Flooding Rains for S Midwest:  

 

Amid A Lack of Fresh News; Another Choppy CBOT Trading Session Awaiting Friday’s USDA Report

Feb 5, 7:03 am | Morning Commentary

** 6:30 AM CBOT Futures: Mar soybeans are unchanged at $9.185, Mar corn is up .25 of a cent at $3.795 while Mar Chi wheat is down .50 of a cent at $5.2525.

** AgResource Morning CBOT Comment/Analysis: Good Morning! It has been a mixed and low volume overnight trade. Asia is still out for the Lunar New Year holiday while fresh news is lacking to direct CBOT values ahead of Friday’s USDA February crop report. ARC looks for another mixed trading session.  

  US President Trump will be offering his State of the Union Address this evening and he is likely to tout his administration’s trade accomplishments with USMCA and in the trade negotiation progress with China. Following the USDA February Crop Report is the next US/China trade negotiations in Beijing that will decide if a trade pact can be signed in late February when President Trump is over in Asia for meetings with North Korea. Otherwise, any signing might be delayed until sometime in March.

  At some point, China’s dollar amount pledge specifically to ag and energy in terms of annual US purchases should come to light. It will be interesting to see if the Chinese Gov’t will place any caps on the amount of US grain imported with their domestic cash market prices much higher? Cash corn prices back in the principle feeding areas of China are back near or above $7.00/Bu while wheat is closer to $9.00/Bu. The point is that no one will want to be short of US ag futures following the signing of the US/China trade pact.

  South American weather has improved with better rains for the entirety of Brazil while Argentina sees some needed dryness/sunshine. Temps across Argentina look to average out to near to below normal, which along with adequate soil moisture should favor filling corn and blooming soybeans. South American soy/corn production estimates are stabilizing.

  Flooding rains are a worsening problem in Queensland Australia and the South Central US. Some 20,000 homes are at risk of being inundated in Queensland while SRW wheat in low lying areas is likely to be underwater for nearly a week following 4-7.00” of coming rainfall. US state by state crop condition reports are due for wheat this week and should show ratings below last year.

  The USDA should announce sizeable US soybean sales to China this AM with any left-over buying to be completed this morning. In total, China will have booked another 5 MMTs of US soybeans in a June-September position, which are split between the Gulf/PNW. The push of purchases into the summer and early autumn shows that China has no need for additional nearby soy supplies. Exporters tell ARC that their spot supplies are adequate to mostly surplus.

 ARC looks for another 2-sided trade with the industry awaiting the delayed January crop data that as expected a month ago. We favor long grains on breaks.

** Arctic Cold NW North America and Mild SE; Flooding Rains for SRW Wheat Areas:

CBOT Trades Mixed As USDA Reports Awaited on Friday; South American Weather Pattern Improves

Feb 4, 7:15 am | Morning Commentary

** 6:30 AM CBOT Futures: Mar soybeans are down 1.00 cent at $9.1675, Mar corn is unchanged at $3.7825 while Mar Chi wheat is down 1.50 cents at $5.2275.

** AgResource Morning CBOT Comment/Analysis: Good Morning! It has been a mixed start of the week in diminished volume. Much of Asia is holiday for the Lunar New Year while fresh news is lacking to direct CBOT values ahead of Friday’s USDA February crop report. ARC looks for a mixed trading session today.  

 US President Trump stated in an interview with CBS’s Face the Nation on Sunday said that the US/China has a good chance to make a trade deal. We expect more air time will be given to a positive US/China trade deal potential in Tuesday’s State of the Union Address. This will underpin CBOT breaks.

  ARC expects that FAS will confirm daily US soybean sales of 2-2.5 MMTs in the next few days. Commercial sources tell ARC that China is on a beeline to complete the purchase of 5 MMTs of US soybeans in coming days.

  China will have secured 10 MMTs of US soybeans when the Gov’t finishes its latest promised purchases. However, the US soybean purchases are working their way into China’s crush, since their reserve storage is already filled. This means that US soybeans are just displacing Brazilian soybeans.

  There continues to be rumors that China will seek US corn and wheat as their Lunar New Year holiday ends and before the next round of US/China negotiations in Beijing. ARC expects that China will book US gain for Gov’t stores at some point, but the exact timing cannot be determined.

 Bangladesh is returning for another tender for world wheat. Its expected that US wheat has a chance of filling this demand amid sliding freight rates and low-cost fob bids.

  Russian flour prices rallied to record highs as the country struggles to uncover enough milling wheat to meet domestic supplies. More interesting is the fact that feed use/domestic mill bids are above those seeking wheat for export! This indicates that a fight is underway from domestic end users and exporters that is likely to keep pushing Russian wheat fob prices higher in the weeks ahead.

  US weekly export inspections are estimated in a range of; 16-20 Mil Bu of wheat, 35-42 Mil Bu of corn, and 31-36 Mil Bu of soybeans. US loading of boats for China is active.

  South American weather has improved with better rains for the entirety of Brazil while Argentina sees some needed dryness and sunshine. Temps will be rising to the mid to upper 90’s which will increase the need for the return of better rains in 2-3 weeks. The weather forecast is favorable.

 ARC is bullish of the grains on breaks, and bearish of soybeans on rallies.

** Flooding Rains For South Central US: SRW Wheat at Risk

Clarity is Offered; China to Secure Another 5 MMTs of Soybeans and Likely Grains; USDA February Crop Report Next Friday

Feb 1, 6:30 am | Morning Commentary

** 6:30 AM CST CBOT Futures: Mar soybeans are up 8.00 cents at $9.2325, Mar corn is up 1.5 cents at $3.78 while Mar Chi wheat is up 2.75 cents at $5.1925.

** AgResource Morning CBOT Comment/Analysis: Good Morning! Mostly higher has been the overnight CBOT trade in active volume as the US/China continue to score solid progress in trade negotiations.

  Following a state dinner last night, it was announced that the US would send Ambassador Lighthizer and Treasury head Mnuchin to Beijing for another round of deep trade negotiations. Hopes run high that the US/China can reach a deal by March 1st and its China that is pushing to accelerate the progress of the talks so that tariffs can be reduced. 

  And after some confusion due to language issues, it was understood that Vice Premier Liu meant that China would secure an additional 5 MMTs of US soybeans as a goodwill gesture to President Trump. VP Liu  originally stated in a White House Pressure briefing that China would buy 5 MMTs of soybeans/day! Such buying was impossible amid the lack of US or world supply. That left many (including ARC) to argue that Liu meant that China had bought 5 MMTs of soybeans “as of” today.

  Clarification came hours later when China confirmed that the offer came from the highest level of the Chinese Gov’t and it was a fresh purchase another 5 MMTs of US soybeans – taking China’s total for state reserves to 10 MMTs. This was a goodwill gesture to Pres Trump to keep advancing US/China trade negotiations!

   The China trade team is now heading home to celebrate the Lunar New Year holiday with family. Cash traders are on edge wondering when China will start their next round of soybean buying – which is likely to occur before mid-February – the next round of US/China trade negotiations.

  ARC also notes that on China’s shopping list is the US corn/wheat mentioned by President Trump in yesterday’s midday press briefing. The market impact of China securing grain will be much more bullish than the new 5 MMTs of soybeans. Although China may not need the grain, the price to book the rumored 8 MMTs of US corn is $1.4 Bil FOB and 5 MMTs of wheat is $1.2 Bil FOB. Such costs are modest compared to a US/China trade deficit of $350 Bil. The point is that China wants to keep its purchase promises made in Argentina!    

  The February USDA Crop Report is the next big event for the CBOT next Friday. Including today, there are only 5 trading days until that report. Amid the industry looking for a 110 year low in US winter wheat seeding, and smaller US corn/soy crops due to declining yield, few will want to push their bearish luck in short corn, soybeans or wheat futures heading into the report.

 ARC looks for a firm CBOT trade today as China news resonates with traders and everyone is more optimistic that the US/China can score a trade deal by March 1st or shortly thereafter. 

** The Melting Process Begins with Limited Central US Snowfall and Above Normal Temperatures: