** CBOT corn, soy and wheat futures have spent the morning weakening on fund selling amid a disappointing US export sales report from FAS. The report showed net US soybean sales cancellations and paltry US corn and wheat sales for the week ending January 3rd. This week occurred over the New Year’s holiday, but the market took the sales news as bearish amid the surprising China cancellations. Fund sell stops were triggered in wheat with soybeans testing Monday’s low. The back and forth of the political markets continue.
Traders argue that the Bloomberg story that the US/China Trade Tariff hike (due on March 2nd) will be delayed by 60 days is bearish as potential new US ag demand is pushed backwards. But other media sources are awaiting an announcement following the US/China Beijing negotiations could produce a March US/China Presidential Summit in Florida. US/China trade talks will continue overnight (Friday China time), with announcements by to follow.
** ARC hears positive US/China Trade talk progress. Like the December and January meetings, the US could ask China to secure additional US ag goods as a payment for the tariff delays and for progress with the talks. The big debate is whether China will secure soybeans or US corn. ARC leans in favor of corn.
** US weekly export sales for the week ending January 3rd were; 4.8 Mil Bu of wheat, 18.1 Mil Bu of corn with net cancellations of 22.5 Mil Bu of soybean. The sales were below recent weeks and trade expectations. Traders are trying to understand why China canceled soybeans, but it might have been China privates had purchases on the books before the China Gov’t purchased of 10 MMTs in the weeks following? Next week’s combined weekly soybean sales will include sizeable Chinese purchases that will act as a counter.
** For their respective crop years to date, the US has sold 658 Mil Bu of US wheat (down 60 Mil Bu or 8%), US corn sales are 1,271 Mil Bu (up 204 Mil Bu or 19% from last year), with soybeans at 1,116 Mil Bu (down 404 Mil Bu or 26%).
** In May, China offered to secure $35 Bil dollars of US ag goods and $35-40 Bil of US energy to cut a trade deal and lower the US/China trade deficit. The Trump Administration said yes (mid-May) and then no (day after Memorial Day) which caused the application of US tariffs and retaliatory China tariffs in June. It would be a big disappointment in any US/China trade deal if US ag did not see at least $35-40 Bil of pledged demand annually. ARC remains confident that any US/China trade deal involves sizable purchases of US meats/grains.
** CBOT brokers report that funds have sold 11,000 contracts of wheat, 7,000 contracts of corn, 8,000 contracts of soybeans, 5,000 contracts of soymeal and 2,000 contracts of soyoil. A Chi wheat order sparked a 1-minute sale of 6,700 contracts as March fell below $5.1075.
** South American Weather Discussion: The is wetter in Southern Brazil next week and drier in Argentina. The GFS backed down on the coverage and totals of Argentine rainfall in the 8-10 day period. The GFS’s outlook is favorable in Brazil, with widespread soil moisture improvement expected during and just after safrinha corn seeding ends. Weather watchers are eyeing developing dryness in Argentina.
** AgResource Market Analysis: The CBOT marketplace hit chart-based selling in wheat/soy amid tepid US export sales totals of Jan 3rd. In political markets, the track record of selling sharp breaks is horrible. Amid the positive trade talk, our stance is to use breaks to secure call options. ARC sees value in spot CBOT corn below $3.73. US and world wheat prices have the Northern Hemisphere growing season ahead and will not fall into a lasting bearish trend.
