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Afternoon Market Recap for Dec. 13, 2019

‘Phase One’ has arrived.

U.S. and China strike a partial trade deal, sending grain prices higher Friday

It may have been Friday the 13th, but grain prices saw nothing but good fortunes today. Soybeans led grain prices higher after the U.S. and China announced it has finalized a partial trade agreement between the two countries. Traders awaited additional details but still handed out increases of around 1% for soybeans, while corn and wheat carved out more modest gains in the session. Soymeal and soyoil also followed soybeans moderately higher on expectations of a near-record November crush.

Colder-than-normal weather is returning to the Plains later this weekend and spreading across the entire central U.S. by early next week. The latest seven-day cumulative precipitation map from NOAA shows moderate rain and snow possible through December 20 across the eastern third of the country, with lighter accumulations probable in the Corn Belt during this time.

Stocks jumped higher on Wall St. Friday morning after news the U.S. and China had reached a partial trade agreement but cooled by the early afternoon, with the Dow tilted 5 points lower to 28,127 as some profit-taking mostly balanced things out. Energy prices found moderate gains, meantime, with crude oil, diesel and gasoline all trending 1% to 2% higher in afternoon trading. Natural gas, in contrast, continued to seesaw this week, down around 1.3% Friday afternoon. The U.S. Dollar softened slightly.

Miss some key content from Farm Futures this past week? We have you covered with this list, which includes updates on the USMCA, the Farm Workforce Modernization Act, and much more.

Corn prices were narrowly mixed Friday, with December contracts moving slightly lower while March futures found moderate gains after some technical buying inspired by spillover strength from soybeans. December futures slipped 0.75 cents to $3.6625, with March futures adding 3.25 cents to $3.81.

Corn basis bids were steady to slightly firm across the central U.S. Friday, rising 1 to 5 cents at a handful of Midwestern locations today.

Ukraine analyst ProAgro trimmed its forecast for the country’s 2019 corn production by 0.8% from prior estimates, now at 1.393 billion bushels. The country’s total grain exports are expected to drop slightly from prior projections as well, although grain exports remain 33% higher year-over-year at this time.

South Korea purchased 2.4 million bushels of corn from optional origins in a private deal earlier today. The grain is for shipment in February.

Preliminary volume estimates were for 330,177 contracts, trending 36% higher than Thursday’s final count of 242,661.

Soybean prices received another shot in the arm Friday as the U.S. and China announced the two countries have agreed on a “phase one” trade agreement. Prices spiked nearly 2% higher briefly this morning but settled with gains of nearly 1% in a somewhat choppy session. January futures rose 9.25 cents to $9.0750, with March futures up 9 cents to $9.2150. All told, soybean prices concluded a very positive week, with March futures up more than 1.7% since Monday’s open.

Soybean basis bids were largely steady but narrowly mixed Friday, moving as much as 2 cents lower at an Indiana processor and as much as 3 cents higher at an Illinois river terminal today.

The office of the United States Trade Representative issued a statement this morning announcing a partial trade deal between the U.S. and China: “The Phase One agreement also includes a commitment by China that it will make substantial additional purchases of U.S. goods and services in the coming years.  Importantly, the agreement establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement.” Click here to read how several commodity groups have responded to the announcement.

With this announcement, the U.S. is dropping plans to enact 15% tariffs on $160 billion in Chinese goods that were set to go into effect on Sunday. However, the U.S. will continue to impose 25% tariffs on $250 billion of Chinese imports, and 7.5% tariffs on an additional $120 billion of Chinese imports for now.

President Donald Trump says negotiations for “phase two” will begin immediately, rather than waiting until after the 2020 elections. There are some rumblings the next phase will be harder to hammer out, with Trump facing plenty distractions over a possible impeachment. Trump also says he thinks Chinese imports of U.S. agricultural products will reach annual levels of $50 billion “soon,” but did not elaborate or speculate on exact timing of this milestone.

A major soybean crushing company in Argentina, Vicentin, has suspended most of its operations as it attempts to restructure its debt. The company defaulted on a $350-million-dollar loan earlier in December.

Analysts think the National Oilseed Processors Association (NOPA) will report a November soybean crush totaling 170.032 million bushels when the group releases its official monthly report next Monday. If realized, that would be the largest November crush on record but still trailing October’s mammoth haul by 1.9%, when crushers produced the biggest monthly total on record.

Preliminary volume estimates were not immediately available from CME.

Wheat prices found modest gains Friday on spillover strength from corn and soybeans. March Chicago SRW futures added 2.25 cents to $5.3250, March Kansas City HRW futures inched ahead 0.25 cents to $4.43, and March MGEX spring wheat futures gained 2.75 cents to $5.24.

Ukraine’s wheat exports this marketing year have reached 514.4 million bushels, versus 361.1 million bushels the same time a year ago. Ukraine has also exported more than 165 million bushels of barley in 2019/20.

Tunisia purchased 4.6 million bushels of durum wheat, 3.4 million bushels of soft milling wheat and 2.3 million bushels of feed barley from optional origins in an international tender that closed earlier today. The grain is for shipment between January and March.

Preliminary volume estimates were for 97,223 CBOT contracts, coming in just under Thursday’s final count of 98,145.


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