Ahead of the Open: More Sideways, Choppy Trade With Little Fresh News

Posted on 11/22/2019 7:29 AM

Grain Calls          

Corn: Down 1/2 cent to 1 cent
Soybeans: Down 1 to2 cents
Wheat: Up 1 to 3 cents

General Comment: Corn and soybeans remain weak with negative charts capping rally attempts and China trade uncertainty limiting new buying interest.  While U.S. harvesting progress is going to remain sluggish, the rains in South America have improved the near-term outlook for both corn and soybeans. Wheat chart picture is more bullish and prices are trying to climb the big supply wall of worry.

In his first comments on a partial trade deal with the U.S., President Xi Jinping said Beijing wanted to work toward a phase-one agreement on the "basis of mutual respect and equality." Xi added that though his nation neither initiated nor coveted a trade war, China would fight back when necessary. Vice Premier Liu He, the country’s top trade negotiator, wrote a lengthy op-ed in the Communist Party’s flagship People’s Daily highlighting the key role for the market and non-state players-- perhaps an attempt to address one of America’s long-standing criticisms of the country’s economic model. 

This morning, President Donald Trump told Fox News that there is a “very good chance” to make a deal with China.

Stock index futures are running with the comments, pointing to a rally on Wall St. But commodity markets have tired of the rhetoric and will wait for any deal’s details about ag trade.

Meanwhile, House Speaker Nancy Pelosi is casting doubt on passage of the USMCA trade deal by the end of the year. “I’m not even sure if we came to an agreement today that it would be enough time to finish,” told reporters on Thursday. Pelosi and House Ways and Means Committee Chair Richard Neal met today with U.S. Trade Representative Robert Lighthizer, but they were unable to reach a final agreement.  Neal said he will continue talks with Lighthizer through next week when the House is in recess to maintain momentum on the final changes Democrats are seeking. Neal thinks a December vote on USMCA is still a possibility.

Canadian National Railway is proposing a voluntary binding arbitration to the Teamsters Union to restart operations that have been closed for the past three days. The shutdown has caused some problems moving grains in parts of the Northern U.S. Plains too.

USDA daily export sales reporting service said private exporters did not make any large sales in the past 24 hours. That follows three separate corn sales early this week that totaled 429,000 metric tons delivery to unknown destinations during the 2019-20 marketing year

Corn: December corn is heading for a fifth weekly decline since Oct. 11. This market is down into long-term support but market technicians argue that prices need to plunge into early 2020 to complete a 5-year cycle low bottoming process. Argentina's government and the country's main grains exchange increased their soy planting estimates on Thursday, as growers hedge against political uncertainty by shifting toward oilseeds, which are cheaper to grow, and away from more expensive corn. Argentine President-elect Alberto Fernandez, set to take office on Dec. 10,  and farmer expect him to increase soy and corn export taxes. "Soy planting area has grown thanks to a reduction in planned corn sowing," the exchange report said. It added that 31.3% of this season's soy has been planted so far. "Water reserves in the west of the provinces of Cordoba and Buenos Aires are mediocre. This situation forces us to decrease our corn sowing projection by 100,000 hectares to 6.3 million hectares," the exchange's report said. "To date, 45.7% of estimated corn area has been planted throughout the country."

SoybeansJanuary beans are new weekly lows and headed for a third straight weekly decline. The market is under pressure from improving South American crop outlooks. Palm oil futures touched a more than two-year high on Friday, lifted by prospects of lower production and stockpiles. Leading industry analyst James Fry on Wednesday said that top palm oil producers Indonesia and Malaysia is expected to see little growth in output next year, potentially leading to a supply deficit and higher prices.  Soybean oil continue to move higher with palm prices.

Wheat: Futures are heading for the first weekly gain since mid-October after futures held key support and global demand continues a steady flow of buying and support to global prices. Crop ratings for French wheat and barley fell sharply last week while farmers made little progress with sowing, data from farm office FranceAgriMer showed. An estimated 78% of soft wheat, France's main cereal crop, was rated good or excellent in the week to Nov. 18, down from 84% a week earlier and below an 82% score in the same week last year. French farmers had completed 74% of soft wheat sowing for next year's harvest, up from 71% a week earlier but below the 97% progress seen a year ago, the report said. The corn harvest was also showing an eight-day lag compared with the five-year average.

Livestock Calls

Cattle: Steady to mixed
Hogs: Steady to weak

Cattle:  Cattle are seen steady to either side of unchanged with prices little changed for the week. Beef prices fell again on Friday with Choice down $3.35 to $234.86 and Select dropping 91 cents. Choice touched $242.34 last week the highest since June 2017. Cash bids are up $1 to $2 this week. USDA releases in monthly Cattle on Feed report tonight  and that is expected to show the largest placements and on feed totals in a decade.

Hogs:  Lean hog futures seen defensive after pork cutout values tumbled $5.11 to $81.47 on Thursday after rising Monday to $89.14, the highest three months. Bellies and hams led the declines with butts rising yesterday on light sales for a second straight session. Signs of progress on a U.S.-China trade deal helped to snap a six-session sell-off yesterday and a test of yesterday’s low and rally would be a bullish signal. Hog futures also found support Thursday after USDA reported weekly export sales of U.S. 2019 pork at 54,400 MT, including 5,200 MT to China, and another 36,400 MT sold for 2020, including 34,300 MT to China.

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