November 16, 2018

Markets Want a Trade Deal

November 16th, 2018

Good Morning from Allendale, Inc. with the early morning commentary for November 16, 2018!

Grain Markets are hanging on every headline regarding the trade war between the US and China. Recent signs of good demand are encouraging, and traders would like to see that continue in this morning's export sales report.

Weekly export sales will be released this morning, one day late due to Monday's Veteran's Day holiday. Analysts expect to see corn sales of 500,000 to 900,000 tonnes, wheat 400,000 to 650,000, and soybeans 400,000 to 700,000. As usual, the report will be released at 7:30 AM CST.

NOPA Crush was reported at 172.346 million bushels for the month of October, well over the 170.026 million bushel trade estimate, and 4.9% over last year. On top of that, it is also a new record of any previous month in history. The previous peak was 171.858 million from March of this year. 301 million bushels have now been crushed in the first two months of the marketing year, 10.8% over last year.

Ethanol production fell from 1.068 million barrels per day to now 1.067 for the week ended Friday the 9th. This was 1.2% over last year. The year to date pace is also 1.2% over last year.

NOAA's long-term map updates (three-month outlook) were little changed from last month. They continue to show above average temperatures for the Midwest with normal to below-normal precipitation.

Ukraine's Ag minister believes the countries 2018 grain harvest could reach a 68 million tonnes. This would represent a new record for the country. With 65 million tonnes already harvested, farmers there are hoping for good weather to get the remaining crop out of the field.

Managed money funds were thought to be buyers of 3,500 soybean contracts, 2,000 wheat, and 2,500 soyoil yesterday. They were neutral in corn, and sellers of 3,000 soymeal.

Trade headlines have lent support to ag markets in recent session with the latest support coming from, "China has delivered a written response to U.S. demands for wide-ranging trade reforms, three U.S. government sources said on Wednesday, a move that could trigger negotiations to bring an end to a withering trade war between the world's top economies." (Reuters) The question is what happens next? Are China's concessions enough? Will a tweet blow up the progress? We may need to wait for the G-20 meeting and possibly beyond to find out.

Volatility continues in the energy complex with both crude oil and natural gas trading some big ranges this week. Crude Stocks for the week reported a build of 10.3 million barrels. Analysts were expecting a build of only 3.2 million.

Actual Slaughter report showed production details for the week ended November 3, and had dressed steer weights up by 4 lbs. to now 899 lbs. per carcass. Heifer weights rose by 7 lbs. to now 835 lbs. per carcass. Dressed hog weights rose by 1 lb. to now 210 lbs. per head.

China's agricultural ministry said this morning it had confirmed a new African swine fever outbreak on a farm in the southwest province of Sichuan.

Dressed Beef Values were higher with choice up 0.39 and select up .40.  The CME Feeder Index is at 148.93.  Pork cutout value was down .35.

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