This Week in Agriculture:
A Mixed Bag of Information from the Week that Was: January 11, 2019
· This week was loaded with lots of news stories with no real direction. Traders spent much of their time focusing on Brazilian weather, Chinese trade negotiations and the non-existent USDA report.
· The government shutdown was most obvious this week with the absence of the major USDA report scheduled for Friday. The January report is always a major factor in market moves as it gives us insight into final production numbers and total stocks as of December 1st. Without the updated numbers direction will likely remain lacking as traders are unsure of whether or not a surprise will be hidden in these numbers when they are released.
· The government shutdown is impacting other portions of agriculture as well. The sign-up for the Market Facilitation Program has been extended. The original deadline was January 15th, but with the government shut down farmers have been unable to enroll. Officials determined early in the week that the sign-up period would be extended beyond the deadline by as many days as the government remains closed.
· The EPA has also been impacted by the shutdown but made it clear they are continuing to work on the rule making behind year-round e-15. Something they claim will be ready to be rolled out by June.
· Though the government is shut down export inspection numbers have been made available. This week we saw final numbers released through the first quarter of the marketing year. While soybeans and wheat saw a disappointing quarter, corn was quite surprising, coming in 61% higher than last year.
· In addition to negotiations taking place surrounding the government shutdown traders were monitoring preliminary trade talks between the US and China taking place this week in Beijing. Talks were mostly among mid-level government representatives, though China’s top trade representative did stop by on the first day to get things started on the right foot.
· Both countries were clear the talks were ‘positive’ and ‘beneficial to the process,’ with China reiterating its promise to purchase US agricultural and energy products and the US restating the issues the administration and others feel need to be resolved. Both parties were clear close contact and communication will continue, with the Chinese hoping to see a resolution in place by the February 4th start of their New Year’s holiday.
· In addition to positive talks reports surfaced China was in buying more soybeans Monday. Rumor is 3 cargoes or around 180,000 mt (6.6 mbu) was sold, though we will not see actual confirmation of purchases until they are shipped or the government reopens and announces them.
· China also made moves to approve several genetically modified traits for import. The first such move of its kind in 18 months was described as a “goodwill gesture towards the resolution of the trade issue.”
· What could impact China trade the most going forward would be how the South American crop continues to fare in the coming weeks. A recent stretch of hot and dry weather in Brazil has forced analysts there to scale back relatively significantly on their production estimates. It was just a few weeks ago talk of a 130 mmt crop were relatively common—much larger than the 119 mmt crop produced last year—because of higher acres and a relatively decent start to the growing season.
· The shift in weather has prompted many private analysts to drop their estimate closer to 116 mmt, which would be about 220 million bushels lower than the current USDA estimate. CONAB, Brazil’s version of the USDA put production between the private guesses and the USDA this week, coming in at 118.8 mmt, down 1.3 mmt from their last estimate.
· Forecasts over the next 2 weeks have introduced more rain than initially seen earlier this week taking some of the worry over crop potential down a bit, but the situation will definitely have to be monitored closely, especially when it comes to second crop corn potential.
Jan 11, 2019
Citizens Weekly Newsletter January 11, 2019
This Week in Agriculture:A Mixed Bag of Information from the Week that Was: January 11, 2019· This week was loaded with lots of news stories with no real direction. Traders spent much of their time focusing on Brazilian weather, Chinese trade negotiations...
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Jan 14, 2019
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