First Thing Today: Progress Made in NAFTA 2.0 Talks

Posted on 01/19/2018 6:09 AM

Good morning!

Soybeans lead gains overnight… Soybean futures climbed for the fifth session in a row overnight, with nearby contracts up 3 to 4 cents, and the market is on track to post its biggest weekly gain in three months thanks to weather concerns in Argentina. Corn futures also favored the upside overnight and the market is currently up a penny. Wheat futures are fractionally to 2 cents higher, with spring wheat leading gains. The U.S. dollar index is under light pressure, with crude oil futures posting moderate losses.

Expectations for USDA’s Weekly Export Sales Report:

 

2017-18 (in MT)

2018-19 (in MT)

Corn

500,000-800,000

0

Soybeans

600,000-1,000,000

200,000-400,000

Wheat

200,000-500,000

0

Soymeal

100,000-300,000

0

Soyoil

8,000-25,000

0

 

Senate takes up stopgap; outcome unclear; House clears spending extension to Feb. 16…Time is short for senators to clear a spending deal and avert a government shutdown. The Senate took up a four-week continuing resolution late Thursday, but the bill’s fate remains unclear as Democrats, whose votes are needed to clear a continuing resolution, are withholding support over the absence of a broader spending and immigration deal. Senators will try today to keep the government open beyond midnight, when current appropriations expire. Senate Republicans are meeting this morning to discuss a path forward, possibly a stopgap spending measure of a few days. The House late Thursday passed a four-week stopgap appropriations bill on a 230-197 vote.

Progress is being made in NAFTA 2.0 talks as Mexico envoy says consensus reached on nearly half of deal…The U.S., Canada and Mexico have general agreement on about 40% of the topics being negotiated in the North American Free Trade Agreement (NAFTA), and Mexico may be able to accept an increase in the minimum regional content for vehicles traded under the deal, according to the nation's ambassador to Washington, Geronimo Gutierrez. He said that the nation may be able to accept an increase in the minimum regional content for vehicles. But he reiterated the government’s long-standing position that it will leave the negotiating table if President Donald Trump gives notice of his intention to withdraw.

Argentine exchange warns some bean acres may not be planted... So far, the Buenos Aires Grain Exchange reports Argentine farmers have planted 96.7% of their intended area. But the exchange warns that around 300,000 hectares of intended bean acres have not been planted in northwest areas of the country and could shift to other crops like kidney beans as the soybean planting window is closing. Typically, soybean planting is finished by the first week of January.

Poll: U.S. farmers plan to plant more soybeans, less corn in 2018… A Farm Journal PULSE survey conducted earlier this month indicated 54% of respondents will keep corn and soybean crop acreage unchanged this year. But 20% said they would plant fewer corn acres and more soybeans, while only 8% intend to plant more corn and fewer beans.

Japan using more corn in feed… Corn made up 47.2% of Japan’s animal feed rations in November, up 0.1 point from October and 1.4 points above year-ago levels, according to preliminary data from its ag ministry. Sorghum and wheat use were both down from the month and year prior at 2.1% and 1.8% respectively. But barley made up 3.5% of the country’s feed production in November 2017, steady with October and up 0.1 points from the year prior.

Confirmation EU struggling to ship wheat… Since the start of the marketing year, the EU has exported 11.3 MMT of soft wheat, down 2.6 MMT (19%) from year-ago levels, according to official data released Thursday. The country has struggled to move wheat amid strong competition from Russia. Its barley exports, on the other hand, are up 300,000 MT from year-ago at 2.7 MMT.

China charges local officials with protecting farmland… Local governments will be held accountable for retaining and protecting arable land under their jurisdiction and for improving land quality, according to new guidelines issued by China’s state council on Thursday. It goes on to note that central government funding for soil remediation projects will hinge on how well a local government does protecting the land. Land protection will be added to the criteria on which local officials are assessed. Soaring urbanization and industrialization has encroached on traditional farmland areas in years past, and the country is working to restore and retain farmland vital for feeding its growing population.

Cash cattle trade has yet to begin, but traders still optimistic about this week’s prospects… In direct contrast to last week’s early week trade, negotiations have stretched late this week and there is still no word on cash action. So far, just a few hundred head have changed hand in the Iowa market around $121, up a buck from week-ago levels. Traders fully expect higher trade given some stressful cold early in the week and tighter showlists. They have pushed cash prices roughly $2 above last week’s action. Therefore, confirmation of higher trade could generate a relatively limited response.

Cash hog bids slip again… Cash hog bids fell 31 cents on Thursday as disruptions from an explosion and wintry weather in the southeast slowed marketings in some areas. But the setback did not spark too much of a reaction in the lean hog market since futures hold just a very slight premium to the cash hog index and traders don’t expect cash market weakness to linger.

Overnight demand news… This week, the European Union awarded 40,586 MT of Ukrainian barley imports under its annual duty-free quotas. The bloc also granted 26,180 MT of wheat imports from varied origins under reduced-tariff quotas as well as 130 MT of Canadian wheat under a duty-free quota.

Today's reports:

 

Add new comment