Dec 31 Morning Ag Commentary

by Steve Freed,

Merry New Year. Grains are mixed. SH is up 5 cents and near 9.01. CH is unchanged and near 3.75. WH is down 3 cents and near 5.08. US government is still in partial shutdown. US Dollar is lower. Crude is higher. US stocks are higher.

Wire story reports the U.S.-China trade war resulted in billions of dollars of losses for both sides in 2018, hitting industries including autos, technology – and above all, agriculture. Broad pain from trade tariffs outlined by several economists shows that, while specialized industries including U.S. soybean crushing benefited from the dispute, it had an overall detrimental impact on both of the world’s two largest economies. The losses may give U.S. President Donald Trump and his Chinese counterpart, Xi Jinping, motivation to resolve their trade differences before a March 2 deadline, although talks between the economic superpowers could still devolve.

A senior Chinese official said Sunday that the country will move to produce at least 600 million tons of grain in 2019; the country also vowed to keep its grain sown area stable at 1.65 billion mu (110 million hectares) next year; China has achieved another year of bumper harvest in 2018 with grain output remaining at a high level of 657.9 million tons, albeit down 0.6 percent from 2017.

For the week, Winter Wheat prices were down roughly 3 cents for Soft Red Winter, down 6 in the Hard Red Winter, and down 11 for Hard Red Spring; Corn was down 3 cents; Soybeans down 2; Soymeal up $3.00, and; Soyoil down 30 points (crushing margins were up around 5 cents at $0.99, oil-share was down 1% at 30%).

For the month, Winter Wheat prices are down roughly 6 cents for Soft Red Winter, down 7 for Hard Red Winter, and down 26 for HRS; Corn is down 3 cents; Soybeans down 6; Soymeal up $1.00, and; Soyoil down 35 points (crushing margins are up 6 cents at $0.98, oil-share is down 1% at 30%).

For the year, Winter Wheat prices are up roughly 15 cents for Soft Red Winter, down 16 for Hard Red Winter, and down 87 for Hard Red Spring; Corn is down 17 cents; Soybeans down 95; Soymeal down $14.00, and; Soyoil down 580 points (crushing margins are up 1 cent at $0.97, oil-share is down 4% at 30%).

Corn continues to find overhead resistance from the unsold US 2018 supply. This despite talk of a lower final US 2018 US crop and hopes for higher export demand until the 2019 South America harvest. Trade will be watching trade relations between US and Mexico. US closing the border could stop corn, soybean, pork and beef exports to Mexico.

Wheat trade volume has been low. World wheat trade has also slowed. Wheat prices hurt last week by lower Russia prices and lack of Russia export curbs.

Brazil temperatures will be seasonable. There are some dry pockets across the nation that must get some timely rain soon. Recent rain in the drier areas of southern Brazil has left parts of the region dry and other areas temporary moist. This kind of trend will likely prevail through the next two weeks and just enough rain is expected to limit areas of crop stress.

Argentina temperatures will be seasonable during the next ten days. Argentina’s bottom line is one of concern for winter wheat maturation, harvesting and grain quality. Too much moisture is expected to fall too often in the next week to ten days. There will be some opportunity for brief drying, but rain returns a little too frequently and that is what may harm unharvested grain quality. Summer crops in central parts of the nation will experience frequent rainfall, but there will be a day or two between rain events at times helping to reduce the potential for serious flooding. The biggest concern about frequent rain for summer crops will be in the planting of late season crops and the wetter biased conditions will make planting a bit of a challenge at times.

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2018-12-31T13:09:14+00:00 December 31st, 2018|