December 13, 2019

Wake Up Call

Holiday Trading Coming Early?

Good Morning from Allendale, Inc. with the early morning commentary for December 12, 2019.

Grain markets are mixed on quiet volume as they appear to be headed into holiday trade a bit early as a lack of new news or development of ongoing issues leaves traders unwilling to take new positions ahead of the holidays.

Estimates for this morning's weekly export sales report have corn at 400,000 to 800,000 tonnes, soybeans 500,000 to 1,100,000, wheat 200,000 to 450,000, soymeal 125,000 to 300,000, and soyoil 8,000 to 30,000.

Weekly ethanol production, covering activity through last Friday, showed an increase in production from 1.060 million barrels per day to now 1.072. This is the highest weekly production since June 21. Year/year, production in the last four weeks has ranged from -0.9% to now +2.5%.

FranceAgrimer raised its soft wheat export forecast for the 3rd consecutive month, setting it at 12.2 million metric tonnes, which is also a 4-year high. Last month’s projection was 12.0 MMT.

USDA reported 725,000 tonnes of US soybeans had been purchased by Chinese and unknown (China) buyers yesterday. This is great news for the soybean market and confirms buyers were active in using those special tariff-free import permits the Chinese government issued last week. Even if "unknown" is not China, this represents the largest Chinese booking Since April.

JBS, the major Brazilian meatpacker, is in talks to import nearly 200,000 tonnes of corn as higher prices in their domestic market make imports more lucrative. Shipments are likely to be imported to Brazil at the beginning of next year as supplies normally decline at that time of year.

U.S. President Donald Trump is expected to meet with top trade advisers on Thursday to discuss planned Dec. 15 tariffs on some $160 billion in Chinese goods, three sources familiar with the plans said, as markets braced for potential negative impacts. Officials circulated talking points downplaying the repercussions such a tariff hike would have on the U.S. economy ahead of Trump's meeting with Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin, and White House advisers Larry Kudlow and Peter Navarro. (Reuters)

The weekly Iowa/Southern Minnesota hog weight report indicated that region's live hog weights were seen at 288.4 lbs. per head for last week (12/11). That is 1.5% over last year in the same week. The prior week's weights were +0.9% (11/30).

Today's Lean Hog Index, covering cash hogs through Tuesday, will be quoted at 59.46 from CME Group. Futures are implying the LHI for tomorrow's cash hogs, reported by CME on Tuesday, will see 60.70.

African Swine Fever still will not go away, even as it appears to be slowing, as China reported findings of the disease in dead wild boars in its Shaanxi province.

No sales on the Fed Cattle Exchange were noted yesterday. Cattle feeders had offered 1,068 cattle for sale in seven separate lots. Last week's FCE was a positive one with $119 sold. Feeders had posted offers of $119 and $119.50.

Dressed beef values were lower with choice down 2.84 and select down 1.63.  The CME feeder index is 143.00.  Pork cut-out values were up .07.

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