Soybeans: Down 1 to 3 cents
Wheat: Mixed to mostly weaker
General Comment: Officials from both Washington and Beijing continue to talk about getting closer to ending the trade war, but the ag markets have grown tired of talk about progress and want a final deal and specifics on any Chinese commodity purchases. Grain prices are soft overnight on light volume and little fresh news.
China lowered its goal for economic growth this year to between 6 and 6.5 percent, the weakest in almost three decades. When announcing the target at the first day of the National People’s Congress in Beijing, Premier Li Keqiang warned of a “tough economic battle ahead” as he unveiled 2 trillion yuan ($298 billion) of tax cuts while the defense budget will grow by 7.5 percent. Shares in Shanghai closed at their highest level since June. The United States has demanded that China make substantial changes to its laws and practices to protect U.S. intellectual property, end forced transfers of U.S. technology to Chinese firms, curb generous industrial subsidies and open the domestic market to U.S. companies. Reports continue to indicate the two sides still had substantial work ahead to reach agreement on a way to ensure China's follow through on any pledges. Talks could still collapse if a deal cannot be reached on enforcement of these so-called "structural" issues.
U.S. opened a new trade battle on Monday when it ended preferential trade deals with India and Turkey. U.S. Trade Representative Robert Lighthizer announced Monday that India and Turkey will within 60 days no longer qualify for a zero-tariffs status that is given to some poor countries to help them grow. Turkey and India reacted with a mix of anger and resignation Tuesday at the United States' decision to end a preferential trade program with the countries that will see some tariffs return on goods. In the announcement, Lighthizer said India had not agreed to open its markets more to U.S. companies. The move comes just weeks before India’s national elections and may increase opposition attacks on Prime Minister Narendra Modi’s foreign policy track record. Two separate reports published over the weekend found that the cost of Trump’s trade policies ran into the billions of dollars and are being largely borne by U.S. consumers.
The USDA's daily export sales reporting service showed no new daily sales. That may lend some early pressure.
Corn market seen little changed to start today as a failure to hold most of early gains Monday keeps the market on the defensive. Rising gasoline price premiums to ethanol will help to boost demand for the biofuel and further improve margins. The U.S. Environmental Protection Agency said on Monday it had sent a draft of its proposed rule allowing year-round sales of higher ethanol blends of gasoline to the White House Office of Budget for review.
Soybean futures seen slightly lower after prices ran up to key resistance and gave back most of the strong early-session gains by the close on Monday. Underlying support continues from the potential for massive new Chinese purchase of U.S. farm products. China soy buyers have been quiet recently both for U.S. and Brazilian supplies. U.S. prices are now above Brazil export values and that has slowed farmer selling in Brazil.
Wheat futures seen weak on chart-based selling and the failure of U.S. wheat to sold to Saudi Arabia in its purchase of 625,000 MT of German and Baltic grain. Russia’s ag ministry says the country’s wheat crop will total between 75 MMT and 78 MMT in 2019, at least a 4% gain from the year prior, adding that the crop could be as large as 80 MMT if the weather cooperates. Black Sea wheat futures fell to new contract lows this morning on light volume. Yesterday, the EU Commission forecast this year’s wheat crop will rise 12.1 MMT to 140.8 MMT.
Hogs: Steady to firm
Cattle futures seen mixed with some carryover selling from Monday offset by stronger beef prices. Futures closed lower on Monday as investors booked profits after contract highs hit on Friday. Managed funds expanded their net long in the week to Feb. 19 to more than 115,000 contracts, the largest since December 2017, CFTC data showed Friday. A new update is out tonight through Feb. 26. On Monday, Choice beef rose $2.26 to $223.55, the highest since June. Select beef carcass values rose 42 cents. Sales continued slow for a second day at the higher prices.
Hog futures are steady to firmer amid as wholesale pork values rose $1.01 to $62.93, the highest since Feb. 15. Sales were light to moderate but up from Friday’s dismal activity. Slaughter on Monday estimated at 465,000 head, up from 448,000 a year ago and last week’s weather restricted 361,000. Vietnam's prime minister has called for "drastic measures" to fight the spread of African swine fever in the Southeast Asian country. From Feb. 1 to March 3, the fever was found in 202 households in seven cities or provinces in northern Vietnam, the fifth-biggest pork producer. China's state planner pledged on Tuesday to resolutely control African swine fever, while adding it will stabilize supplies of pigs and poultry. At the opening of China’s annual meeting of parliament, the National Development and Reform Commission (NDRC) also said in its work report it will accelerate establishing support policies for agriculture in line with international rules.