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Morning Commentary

March corn up ¾ at $3.8975

March beans down 2 at $9.4025

The DOW is down

USD is weaker

Crude oil down $.09 at $58.14

Good morning,

Corn traders are most interested in learning more about Chinese demand. Will the Chinese be larger buyers of U.S. corn or will it be just a bit more ethanol, DDGs and sorghum? Will there be required Chinese buying in the future? Will the Chinese be forced to meet their WTO commitments? There are lots of unanswered questions and the trade is eager to learn more specifics. Some in Washington are saying the Chinese will be held highly accountable each quarter, but again no real specifics just rumors and talk.

Soybean traders have all eyes on today’s official signing of the “Phase One” trade agreement with the Chinese. Most all sources inside the trade are looking for increased U.S. soybean buying by the Chinese. The bigger question is when and how much more? Bulls are pointing to the fact early data shows China imported 9.543 MMT of soybeans in December, a 19-month high, and up substantially from 8.280 MMT in November and well above last year’s 5.721 MMT. So perhaps Chinese demand is picking back up some momentum. South American production seems stable on mostly cooperative weather.

China’s pork imports in December rose almost four times from a year earlier, according to Reuters calculations of customs data released on Tuesday, as the country bought more of the staple meat ahead of Lunar New Year holidays in January. December arrivals were 375,000 metric tons according to Reuters calculations compared with 95,384 metric tons a year earlier and 229,707 metric tons in November 2019. Pork imports for full year 2019 jumped +75% to 2.108 million metric tons. Imports of beef, more expensive but also increasingly popular with the country’s growing middle class, also expanded. December beef arrivals climbed +80.6% on the year to 189,000 metric tons according to Reuters calculations. Total 2019 beef imports rose +59.7% year-on-year to 1.66 million metric tons. China’s total agricultural imports from the United States were 14.1 billion yuan ($2.05 billion) in December. (Source: Reuters)

The combination of widespread and prolonged drought and wildfires in Australia is forcing cattle liquidation and pushing total cattle numbers in that country to 30-year lows. Oklahoma State University ag economist Derrell Peel says their ability to maintain production and export levels will be compromised for several years.  “The USDA’s latest projections for global beef markets for major exporting countries forecast for 2020 the U.S. to export more beef than Australia – I think – for the first time ever,” he says. He tells Brownfield with the shortage in beef coming out of Australia, and China becoming the major driver in global beef markets, there are increasing opportunities for the US beef sector.  “If you combine a trade deal that begins to unwind some of the tariff limitations that we face, combined with the growing demand for beef in China anyway,” he says.  “And then add to that, the overall protein deficit in China – all of that suggests tremendous opportunities.” (Source:Brownfield Ag)

 

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