Good morning!
Grain futures firmer overnight… As of 6:00 a.m. CST, March corn was up 1 1/4 cents, March soybeans up 14 1/2 cents and hit a nine-week high. March SRW and HRW wheat futures were up 3 1/2 to 4 1/4 cents and hit three-week highs. Soybeans led the grain markets higher overnight, on hopes for more China purchases of U.S. beans. (See item below.) On tap today for the grains and livestock markets is the weekly USDA export sales report. The key outside markets today see the U.S. dollar index slightly higher, with crude oil prices slightly down and trading around $65.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.17 percent.
Warmer weather continues in much of U.S. … The National Weather Service today reported there will continue to be above-average temperatures for much of the continental U.S. The central U.S. will see temperatures 15-30 degrees above normal, with highs well in the 60s and 70s. Over the western U.S., temperatures generally will see highs in the 50s and 60s, while the Northeast will see high temperatures in the 30s and 40s. Chances for precipitation will increase the next couple days over potions of the southern Rockies and south/central Plains into the lower Mississippi and Tennessee Valleys. Although rainfall from this system will generally be beneficial, areas within the southern Plains have been highlighted for a marginal risk for excessive rainfall with chances for flash flooding on Friday. There is a marginal risk for severe thunderstorms across portions of west Texas, with a risk for large hail associated with the storm. Meantime, cold air wrapping around the back side of a clipper system will continue to bring lake-enhanced snow showers over the Great Lakes today into early Friday.
U.S.-China trade truce may be extended by as much as one year: report… The soybean futures markets rallied overnight, with March beans hitting a nine-week high, after a report on a potential extended trade truce between the U.S. and China fueled hopes for additional purchases of American agricultural products, including soybeans. President Trump and Chinese leader Xi Jinping could extend their trade truce by as much as a year when they meet in Beijing in April, the South China Morning Post reported Thursday and as reported by Bloomberg, citing several unidentified people familiar with the discussions. The summit is set to be anchored around short-term economic wins, including fresh Chinese purchase commitments, the Morning Post report said. Last week, Trump said in a social media post that China was considering extending its soybean purchases to 20 million tons in the current season.
Trump mulls quitting USMCA trade deal as U.S. House votes to end duties on Canada imports… President Trump is privately considering exiting the North American trade pact, Bloomberg reported, citing people familiar with the matter, injecting further uncertainty about the deal’s future into pivotal renegotiations involving the U.S., Canada and Mexico. The US-Mexico-Canada Agreement is set for a mandatory review before a possible extension on July 1, “a process that was once expected to be routine but has transformed into a contentious negotiation, with Trump demanding additional trade concessions from Ottawa and Mexico City,” said Bloomberg. Meantime, the Republican-led U.S. House has passed legislation aimed at ending the Trump’s levies on Canadian imports. “Wednesday’s vote represents an increase in political pressure to change course on Trump’s signature economic policy just months before the midterm elections,” said Bloomberg. “The vote also signals a growing anxiety over the White House’s economic agenda before elections that are expected to focus heavily on affordability.” The U.S. Senate will now take up the measure.
Fed governor Miran: Fed can still cut rates despite strong U.S. jobs report… Federal Reserve Governor Stephen Miran said surprising strength in January’s U.S. jobs data doesn’t mean Fed policymakers should hold off on additional interest rate cuts. “Miran said planned supply-side reforms such as a reduction of business regulations, along with an expectation that housing inflation will slow, will clear the way for policymakers to continue lowering their benchmark rate. Miran has dissented at every policy meeting since joining the Fed’s board in September, favoring larger reductions than his colleagues were prepared to support,” said a Bloomberg report. There are “a variety of reasons why I want to see lower interest rates, and while (Wednesday’s) jobs data made me feel really good about the economy, I think the truth is that pushing out the supply side of the economy still allows for monetary policies to accommodate that,” he told Fox Business in an interview. Traders have pared the probability of a rate cut at the Fed’s June FOMC meeting — previously eyed as the most likely timing for the next reduction — to less than 50%.
China eases duties on some EU dairy products… China has set final import tariffs on some dairy products from the European Union at as much as 11.7% following an anti-subsidy investigation, Bloomberg reported. The duties apply to goods including fresh and processed cheese and will take effect beginning Friday, according to China’s Ministry of Commerce. European cheese and cream exports to China “face a very competitive market with other exporting countries,” particularly those that benefit from free-trade agreements, said Alexander Anton, secretary general at trade group Euromilk. There have been efforts to deepen economic cooperation between China and the EU following a leaders summit in July, including a recent visit by French President Emmanuel Macron to China. Earlier this week, the EU moved to exempt one of Volkswagen AG’s China-built electric vehicles from hefty import duties, the first car to get approval under a new mechanism aimed at thawing tensions.
China buys Venezuelan crude oil from U.S. … China has bought some Venezuelan crude oil that was purchased earlier by the U.S., according to U.S. Energy Secretary Chris Wright. The U.S. had asserted control over Venezuela’s crude industry after seizing former President Nicolás Maduro, and the country’s “oil quarantine” is essentially over, Wright said. China’s refiners were the biggest buyers of Venezuelan crude before the U.S. move, and some banks expect a revival in Venezuelan output over the medium term.
Malaysian palm oil futures weaker… Malaysian palm oil futures slipped for a third consecutive session Thursday, hovering below MYR 4,050 per MT and approaching a four-week low. Weakness in edible oils on the Dalian exchange and a firmer ringgit burdened sentiment. At the same time, analysts flagged downside risks from Indonesia, the world’s top palm oil producer, pausing its biodiesel mandate expansion, along with signs of higher output in the months ahead. Export data added pressure, with cargo surveyors reporting Malaysian shipments for February 1–10 declined between 10.5%–14.3% from the prior month. Demand from key consumer China is also expected to soften as buyers turn to cheaper soybean and canola oils. Still, losses were cushioned by Malaysian Palm Oil Board monthly data showing inventories fell 7.7% in January as production slumped 13.8% ahead of Ramadan and Eid. In top buyer India, palm oil imports surged 51% mom to a four-month high, rebounding from December’s sharp decline as refiners rebuilt stocks.
Cattle futures markets show needed price strength… April live cattle on Wednesday rose $3.55 to $240.975. March feeder cattle gained $2.675 to $367.45. The bulls needed to show strength after fading a bit, and they did just that Wednesday, to regain some momentum. Some improved trader/investor risk appetite in the general marketplace this week has worked in favor of the cattle market bulls. Wednesday’s much-stronger-than-expected U.S. jobs report suggests consumer confidence will remain high—meaning still-solid demand for beef at the meat counter. USDA again Wednesday reported no active cash cattle trading as of midday Wednesday. Cash trading last week averaged $241.31, up $1.87 from prior week’s average cash cattle trade at $239.44.
Lean hog futures see bearish chart pattern… April lean hogs on Wednesday fell $1.65 to $93.85 and hit a three-week low. The market saw more profit-taking and technical selling pressure from the shorter-term traders. A rare and bearish broadening pattern on the daily chart for April hogs emboldened the chart-based bears to play the short side Wednesday. The latest CME lean hog index is down 14 cents at $86.32. Today’s projected cash index price is up 20 cents at $86.52. The national direct five-day rolling average cash hog price quote Wednesday was $65.41.