Corn: Up 1 to 2 cents
Soybeans: Up 5 to 8 cents
Wheat: Steady to up 2 cents
GENERAL COMMENTS: Soybeans led the overnight rally, now up more than 25 cents from Monday’s low and wheat and corn followed. Soybean futures are headed for first weekly gain in a month after the decision by China to offer tariff waivers for some U.S. soybeans added to renewed optimism this week over a possible trade agreement between Washington and Beijing. Grain traders are also turning their focus towards next Tuesday's monthly world crop report from the USDA. The soybean market has drawn some additional support from the financial difficulties of Argentine soy crusher Vicentin, which triggered price gains in the soymeal market on Thursday. Argentine soy crushing giant Vicentin is struggling to repay over $350 million in debt and some plants are likely to halt production while it seeks relief amid an economic slowdown in the country and increasing financing costs.
China will waive import tariffs for some soybeans and pork shipments from the United States, China's finance ministry said on Friday, citing a decision by the country's cabinet. The tariff waivers were based on applications by individual firms for U.S. soybeans and pork imports, the ministry said in a statement. It did not specify the quantities involved. China imposed tariffs of 25% on both U.S. soybeans and pork in July 2018 as a countermeasure to tariffs levied by Washington over allegations that China steals and forces the transfer of American intellectual property to Chinese firms. There have been signs of some progress in reaching a phase-one trade agreement between the U.S. and China in recent days, with negotiators in Washington saying they are confident of reaching a deal ahead of the Dec. 15 deadline for fresh tariffs. Data released yesterday showed that trade in goods between the two nations continues to slide as negotiations drag on.
The U.S. economy continues to roll along at a strong clip. U.S. added 266,000 jobs in November and the unemployment rate fell to 3.5%. Both October and September payrolls were revised higher. Employers were forecast to have added 183,000 jobs in November while the unemployment rate held steady at 3.6%. The continued good health of the labor market is good news for the Federal Reserve by validating the view that rates can stay on hold, while also aiding President Donald Trump by reducing the urgency to strike a deal with China. It should add to the demand for meat heading into 2020.
The USDA daily export reporting service did report private U.S. exporters sold of 245,872 metric tons of corn for delivery to Mexico during the 2019-20 marketing year this morning.
In a possible sign of renewed Chinese demand, the USDA said on Thursday that private exporters reported sales of 245,000 MT of soybeans to unknown destinations.
Corn: Futures tested support this week and are bouncing back today. The market’s update will remain limited unless there is an improvement in export sales to go along with the improvement in ethanol production.
Soybeans: Futures are extending gains off the 12-week low hit on Monday. Price gains may slow with more rain in the forecast in parts of Brazil and maybe Argentina next week.
Wheat: Winter wheat are paring this week’s losses after last week reaching a five-month high. This week’s retreat was healthy correction with signs of improvement global demand at higher prices. French farmers had completed 83% of soft wheat sowing for next year's harvest by Dec. 2 compared with 80% a week earlier, farm office FranceAgriMer said on Friday. That was well below 99% sowing progress seen a year ago, it said in a weekly cereal crop report. Flour millers in Thailand bought 55,000 MT of U.S. wheat this week for shipment in February, two trade sources said on Friday.
Cattle: Futures seen following cash bids higher this morning. Cash cattle trade got started at steady to $1 higher prices of $119 in Texas, Kansas and Iowa yesterday, which was in line with trade expectations. Gains came despite a slide for the product market. Wholesale beef prices continued to slide lower with Choice down $1.35 and Select cutouts fell $2.19 on Thursday. Sales were moderately active a positive sign that demand remains robust. The surge in job growth and higher wages bodes well for strong beef demand into 2020.
Hogs: Lean hogs may rise on China’s plans to cut tariffs. Wholesale pork cutout values rose 36 cents amid mixed trends in primal cuts. Sales were slow to moderate. The national average cash hog prices rose 75 cents Thursday, adding to the positive undertone to start trading. Lean hog futures softened Thursday, with deferred months leading losses. That action was in part driven by USDA’s weekly export sales update that included a net pork sales reduction of 1,400 MT for 2020 as 8,500 MT in reductions by China more than offset new business from other nations. But sales of 30,600 MT for 2019 were up 5% from the prior four-week average, despite the fact the reporting period included Thanksgiving. That helped to limit pressure on nearby contracts.