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December 7, 2018 : Market Summary

FOR THE WEEK ENDED 12-7-18

CORN – Let us pause as we remember former President George H. W. Bush, who passed away last week.  December 7th also lives in infamy as we remember those that lost their lives on this day 77 years ago. Markets sparked higher in the first session and first day of a new month after the historic meeting between President Trump and Chinese President Xi in Buenos Aires December 1st.  The meeting was deemed a success on both sides and the markets surged higher.  Details were thin on how the differences between the two were going to be resolved.  Comments continued throughout the week that the talks were going smoothly, but again, no details.  Corn could benefit from a deal by opening the market for DDGs, sorghum, and ethanol.

Most of the week’s news was associated with the soybean market.  Corn’s price direction has been driven by firm demand, soybean prices, and South American weather.  Even though corn managed a higher weekly close, the news was pedestrian after the Chinese meeting.  Unless the December 11th WASDE report gives us some fuel for another rally, corn may be setting up for range bound trade into the end of the year.

Weekly export sales were excellent at 46.4 million bushels and bringing us to 17% ahead of last year’s commitments.  We need 35.3 million bushels of sales per week to hit the USDA’s target of 2.45 billion bushels.  If South America’s weather forecast is correct, we could be looking at strong competition for corn exports in the first quarter of 2019.  Adding to the competition, the Ukraine increased their corn crop estimate to 35.2 mmt compared to the USDA outlook of 33.5 mmt.  There were no export sales for the 2019/2020 reported on the weekly sales report.  Weekly ethanol production increased 21,000 bpd to 1.069 million bpd, the highest number in 13 weeks.  Stocks rose 100,000 barrels to 23.03 million barrels.  US gasoline demand is 1.2% behind last year in the current corn marketing year.

Trade estimates for the December 11 WASDE report:  US ending stocks 1.738 billion bushels versus 1.736 billion in November; world ending stocks 307.59 mmt versus 307.51 mmt last month; Argentine production 42.43 versus 42.50 mmt; Brazilian production 94.41 versus 94.50 mmt last month.

OUTLOOK: Corn may be relegated to a sideways pattern without fresh input from the USDA report or a change in the status of Chinese trade talks.  Seasonally, corn can rally in December, so be prepared if we inch higher.  How the trade winds blow will provide our direction in the next month. For the week, March corn captured a 7 ¾ cent at $3.85 ½, July was 7 ¾ cents higher at $2.99 ¼, and December 2019 closed 3 ¼ cents higher at $4.03 per bushel.

SOYBEANS – January surged 29 cents higher at their high following the US/Chinese meeting December 1st, but disappointed bulls when they only managed to close 11 cents higher on the day.  Many had been anticipating close to a limit up or 60 cent move on the positive sound bites at the conclusion of the meeting.  A lack of details left some wondering what the 90-day cease-fire really meant.  For now, the US will not raise current tariffs, or pile on additional tariffs, that were scheduled to take effect January 1st.  If no “real deal” is made by March 1st, the US is prepared to raise the 10% tariff on $200 billion worth of Chinese goods to 25% and could put tariffs on an additional $267 billion worth of goods.  For their part, according to the US release, China will purchase “very substantial” farm, energy, industrial and other products.  Chinese traders said China will need to cut the 25% tariff on US farm products before they can buy a “substantial” amount of US products, unless the government forces them.  It’s surmised, that any Chinese soybean purchases would be made by the government for their state reserves.  Brazilian soybeans are still cheaper than US origin before any tariff.  Negotiations continue, but events later in the week brought into question how talks will proceed.  Late in the week, Meng Wanzhou, the CFO of giant Chinese technology firm Huawei (and daughter of its founder), was arrested in Canada, reportedly at the request of the US.  There are allegations that the company re-exported US products to Iran.  She is expected to be extradited to the US.  How this arrest may affect US/Chinese trade negotiations is unclear.  Remember, technology issues were what got us here in the first place.

Was last year’s Brazilian soybean crop underestimated?  In November, they exported over 5 mmt of soybeans, more than double what they exported in November last year.  Based on calculations, at this pace their carryout could be a negative 8 mmt.  In the past, it sometimes hit a negative 2 or 3 mmt, but 8 mmt is huge!  No one will be surprised when the USDA makes balance sheets adjusts to account for the tremendous Brazilian soybean exports.  Also, out of Brazil this week, the government stated that if you did not pay the minimum freight rate implemented earlier this year, you would no longer have to pay a fine.  This essentially did away with the minimum.  A definitive January ruling is expected.  Some have insisted the minimum freight rate was unconstitutional.  The new ruling is expected to eliminate freight barriers in getting the upcoming record crop to market.  Brazilian soybean farmers are looking into a proposed railway giving them access to northern export ports.  The $3.24 billion project could cut transportation costs from Mato Grosso to export ports by 30% from the current $2.34/bushel.  Argentina’s costs are estimated at $1.24 per bushel and the US at 93 cents/bushel, according to Agroconsult.  Celeres this week pondered that with favorable weather Brazil could produce 130 mmt of soybeans this year.  The CEO of a large Brazilian grain producer stated at an industry event that 106 million acres of untapped grassland in Brazil could be brought in agricultural production.  Their combined soybean, corn, and sugarcane acres is currently at 158 million acres.

Weekly export sales were at the upper end of trade estimates at 32.7 million bushels.  However large, we slipped to 33% behind last year when the USDA is forecasting a 10.7% year on year drop in exports. We need 26.7 million bushels of sales per week to achieve the lofty 1.9 billion-bushel USDA export forecast.  Last year from this point forward, weekly export sales average a record 21.3 million bushels per week.  Without a return of China to the US market, the current export forecast could be quite a stretch.  There were only 100,000 bushels of new crop sales reported.  This brings new crop commitments to 6 million bushels and well behind last year’s 11.6 million bushels.  The October NASS Crush Report was in line with trade expectations with 183 million bushels of soybeans crushed.  October soyoil stocks were 2.041 billion pounds compared to 1.909 billion pounds expected.

Argentina has been talking with China to try and capture a portion of China meal import business.  This week, China said they will buy 330-400 tmt of soybean oil from Argentina, but said they were not interested in Argentine meal at this time. Trade estimates for the December 11 WASDE report:  US ending stocks 945 million bushels versus 955 million in November; world ending stocks 112.79 mmt versus 112.08 mmt last month; Argentine production 55.72 mmt versus 55.50 last month; Brazilian production 120.88 mmt versus 120.50 mmt in November.  Some trade estimates for Brazil’s bean crop suggest over 130 mmt, if the weather stays favorable.

OUTLOOK:  We continue to be run by tweets and headlines.  How the recent arrest of a Chinese technology company CFO will influence the US/Chinese trade negotiations is unknown.  Everyone is waiting for China to make that first US soybean purchase.  If they buy anything, it will likely be for the state reserve.  For now, it’s a wait and see situation.  Brazil’s soybean crop was 96% planted by December 4th and 1% is expected to be harvested by the end of 2018.  It’s being bandied about that Brazil will be able to ship double the amount of soybeans in January than normal.  It’s a waiting game for now, but in the long term we must be cognizant of the enormous crop potential in South America. For the week, January soybeans held onto a 22-cent gain at $9.16 ¾ per bushel, March was 21 ½ cents higher at $9.29, and November 2019 jumped 22 cents higher to $9.61 ¼ per bushel.

Wheat – Egypt did not issue letters of credit for several wheat shipments.  This caused some fear in the market about their ability to continue an aggressive import program.  Egypt later clarified that LOC’s were issued except for the wheat yet to be delivered.  They followed that up with a new tender.  The suppliers for the new tender were 290,000 tons from Russia and 60,000 tons from the Ukraine.  There were no US offers for this tender. Russia has exported almost 37 million tons of wheat this calendar year.  This is a 50% more than the same period last year.  Despite smaller production, Russia is doing everything possible to remain the world’s leading exporter. There was a flash sale announcement of 224,000 tons of HRW to unknown.  This activity was very welcomed by the wheat market and pushed futures to 15 cent gains on Friday.  Wheat export sales were the 2nd best of the marketing year.  The SRW business to Egypt was part of this week’s total.

Anna Kaverman

anna@mercerlandmark.com


December 4, 2018 : Market Summary

Market Report

Tuesday December 4th, 2018

March 19 corn closed up 2 ¾ at $3.84 ¾ at December 2019 closed up ¼ at $4.02 ¾. January beans closed up 6 at $9.11 ¾ and March 19 closed up 6 at $9.23 ¾. March wheat closed up 1 ¼ at $5.22 ½ and July 19 closed down 1 at $5.32 ¾. Crude oil closed up $.32 at $53.46.

The ag complex maintained a “moderately higher” holding pattern, as traders await details regarding this weekend’s U.S.-China “trade truce”, particularly from the China side of the bargain.  Corn tried to fill the Sunday night gap overnight, trading down into it, but ultimately, could not completely close it. During the day, trade quietly melted up. Managed Money traders were viewed net buyers of about 5,000 corn today, which would leave them net short a little more than 20,000 combined corn futures and options.

First and foremost, tomorrow’s “National Day of Mourning” over the passing of President George HW Bush will close financial markets and most gov’t offices. Curiously, most commodity markets, will be open for business. Despite a continued optimistic tenor in the ag complex, financial markets did not share in that enthusiasm today. U.S. equities traded lower all day, but losses accelerated mid-session, with benchmark indices falling roughly 3% (Dow off almost 800 points). The dollar erased intraday losses, closing near unchanged.

In truth, it was a quiet news day, with most traders begging for some clarity on the China front. The ag markets are pricing in the potential or some extremely short-run export trade to China.  Financials, meanwhile, are more concerned with the prospects of a longer-term resolution. Make no mistake, ag commodities are also concerned about such things, but the prospect of a quick shot in the arm on the export front is a tantalizing prospect to markets that have recently traded near multi-year lows. China agreed with the decision to hold off on a press conference until after the Bush funeral. That may be what is delaying the delivery of their terms of the bargain?

Both corn and bean markets are also adding in a little weather premium, particularly given prospects for a surge in near-term demand. Dryer conditions for Argentina and southern Brazil are a little interesting, though at this time it is difficult to build a story with some forecast model runs suggesting increasing rainfall once again near mid-month. Analysts at Celeres still projecting very strong crops; they see Brazil soy exports between 77-82 mmt for the coming year’s campaign, which compares to the USDA at 77. Favorable SE Asian weather continues to pressure palm oil (off another 1% and near multi-year lows), while problems in Europe and Australia keep rapeseed (and bean oil, to a certain extent) supported.

Technically, corn is doing its best to make a good trade on the weekly chart, posting an outside week up last week, and now a gap higher. The bear could not quite close the chart gap, which will keep the ball in the bull’s court until it’s closed.  November high of $3.90 is tough resistance but momentum is positive.  Jan Beans feature a similar scenario. Daily gap down to $8.96, which also was not completely closed overnight.  Major resistance near the Sunday highs of $9.30.

After giving back much of its gains from Monday during the overnight session, the wheat complex battled valiantly during the day to try and recoup some of those losses, and for the most part they were successful. The weakness overnight could have easily been attributed to the limited new information emerging regarding the trade negotiations between the US and China, combined with the low offer in the Bangladesh tender. Both bits of news are a bit disturbing for the wheat complex moving forward, but there are signs that China interest in US grains may be once again surfacing as Sinograin is said to be asking for bean offers off the PNW for Jan and Feb, but no trade yet. This news may be good news for beans and corn, but for the wheat market, it needs some confirmation of what USDA Ag Sec Perdue said Monday in that the truce could include purchases of US wheat, sorghum, rice and poultry. In fact, there was some talk today that if a deal is resolved, China could purchase as much as 7 MMT of US wheat.

Anna Kaverman

anna@mercerlandmark.com


November 30, 2018 : Market Summary

FOR THE WEEK ENDED 11-30-18

CORN – At the close on Friday President Trump and Chinese President Xi had not yet met at the G20 Summit.  Soybeans should see the biggest effect, but corn will be the recipient of spillover action.  That said, we’ll look at what happened this week in the lead up to the meeting and possible results going forward.

Corn began the week on a sour note and then spent the rest of the week digging its way out.  March corn sank to its lowest level since late September on an early negative spin to US/Chinese talks.  The balance of the week, we traded headlines and tweets that painted a rosier picture for the talks.  Good export sales also lent a supportive air.  Russia seized three Ukrainian vessels saying they violated borders on the Azov Sea.  Russia has blocked the area between the Black and Azov Seas, but Ukraine says it is having a limited impact on grain shipments as only 4-5% of Ukrainian grain exports go through the Azov Sea.  As of this writing, the ships and sailors have not been released by Russia.  This issue caused President Trump to cancel his meeting with Russian President Putin that was to take place at the G20 Summit in Buenos Aires November 30-December 1.  On the bright side, the US signed the “new NAFTA” trade agreement with Mexico and Canada at the G20 Summit.

Weekly export sales exceeded expectations at 49.9 million bushels to bring total commitments to one billion bushels and 16% ahead of last year.  This was the largest weekly sales total in eight weeks.  The USDA is forecasting year on year exports to be flat at 2.45 billion bushels.  We need to average weekly sales of 36 million bushels to achieve the USDA’s target.  Total commitments are 41% of the USDA ‘s outlook when the average for this date is 46%.  Are we a little high on the forecast? There were no new crop sales this week.  Total new crop sales are a measly 4.4 million bushels versus 40.5 million bushels last year at this time.

Weekly ethanol production was surprisingly higher even with the negative margins and reports of some plants closing or slowing their grind.  Production was 6,000 bpd higher at 1.04 million bpd.  Ethanol stocks were 100,000 higher at 22.9 million barrels.  Ethanol margins improved to a negative 12 cents per gallon.  US ethanol futures fell to their lowest level in 13 years!  The EPA released the 2019 RFS mandates in which they kept the ethanol portion of the19.92 billion-gallon mandate at 15 billion gallons.

OUTLOOK: Corn posted a key reversal higher on the weekly chart in anticipation of a spillover effect from soybeans if the talks between the US and China go well on December 1st.  A negative outcome at the trade talks could mean a weaker soybean market, which would be expected to spillover to corn.  South American weather is moot at this time, but there are a couple of areas that will be monitored for dryness in the last half of December.  For the week, March corn rallied 7 ½ cents to close at $3.77 ¾ per bushel, July corn was 6 cents higher at $3.91 ½, and December 2019 corn gained 4 ½ cents to $3.99 ¾ per bushel.  If a rally is seen next week, consider making a benchmark new crop sale.

SOYBEANS – January soybeans were much the same story as corn this week, falling hard on Monday, but recovering the balance of the week.  Negative sentiment concerning US/Chinese relations was a source of pressure, but later comments that the US and China wanted to get a deal done were viewed positively.  In general, it seems like everyone wants to come out looking like the “winner.”  President Trump has said if nothing gets done, he is ready to add addition tariffs on Chinese goods January 1st.  Additional tariffs would include raising the current 10% tariff to 25% on $200 billion worth of goods with the possibility of tariffs on another $267 billion of imports.  Russian President Putin said Russia is ready to fill the void left by the absence of US soybeans and poultry supplies into China.  What does the spread of African swine fever do to China’s meal and corn demand?  They find new cases almost daily and many believe it’s worse than is being reported.  China made their largest purchase of US pork since February this week when they bought 2.4 tmt.  Trade chatter sees China’s soybean import potentially falling to 6 mmt in December versus 9.6 mmt last year.    First quarter imports could slip to 12 mmt from 19.6 mmt last year.    China’s soybean stocks at ports are estimated at 7.5 mmt, up from 6.1 mmt last year and the highest for this time of year in ten years.  In October, China sourced 94% of their soybean imports from Brazil.  They imported just 66.9 tmt of soybeans from the US in October compared to 1.33 mmt a year earlier.  Argentina has been the largest buyer of US soybeans in the first three months of the marketing year with 1.3 mmt.  An unexpected daily export sale of 268.7 tmt of US soybeans to unknown lent support mid-week, as did a late week 120 tmt sale to unknown.

Weekly export sales were disappointing at 23.1 million bushels with big cancellations to China and unknown.  Marketing year to date, Argentina has booked 1.6 mmt.  Total commitments are 32% behind last year at just 854.6 million bushels.  We need to average 27.1 million bushels of sales per week to reach the USDA’s forecast for 1.9 billion bushels of exports.   The USDA’s outlook for exports is for a year on year decline of 10.7%.  There were no new crop sales.  Total new crop commitments stand at 5.9 million bushels versus 9 million bushels last year.

South American weather looks favorable for the first half of December.  The vessel line-up waiting to unload soybeans at the Rosario and Santa Fe ports in Argentina is increasing.  On November 28 there were 28 US boats waiting to unload with an estimated 27 days wait time.  Argentina’s soybean planting is nearly 41% complete compared to 47.3% complete on average. Argentina announced they signed a $1 billion contract with a Chinese state builder for rail improvements.  The 634-mile project runs through Buenos Aires, Rosario and Mendoza province and is expected to reduce transportation costs by 55% since it will support longer trains.

OUTLOOK:  You will know the outcome of the US/China meeting by the time this is published.  If there was a truce of sorts, i.e. no additional tariffs are to be added in January, or they agree to keep talking, soybeans are expected to see a push higher in the short run.  Factors tempering a sustained rally include: China’s battle with African swine fever, which is reducing meal demand and pushing their crusher margins into the red; heavy soybean purchases already made by China from Brazil; and Brazil’s anticipated record soybean harvest which is expected to be harvested early.  With US carryout expected to get closer to one billion bushels, even if tensions between the two countries improve, extensive rallies may be hard to hold.  For the week, January soybeans jumped 14 cents higher at $8.94 ¾ per bushel, March was up 13 cents at $9.07 ½, and November 2019 was 9 ¼ cents higher at $9.39 ¼ per bushel.  January soybeans also posted a key reversal higher on the weekly chart.

WHEAT – Last weekend there was a major escalation in tensions between the Russian navy and Ukraine in the Black Sea/Sea of Azov region near Crimea, where Russian ships have blockaded passage and Ukraine’s government has declared a state of emergency. This action shouldn’t disrupt the wheat trade as roughly 5% of Ukrainian wheat leaves these ports.  However, the bigger issue is more fighting that would alter the risk premium for all Black Sea/Russian wheat supplies. SovEcon upped their Russian wheat export forecast to 34.7 mil tons, 500k higher than their previous estimate.

First notice day for wheat was this Friday and the December contracts for all classes, way outperformed the deferred months blowing out the front spreads. Wheat inspections were very weak and the gap behind the USDA pace has widened every week. US wheat export inspections are running 19% behind last year at this time  which is about 370 million bushels.


November 29, 2018 : Market Summary

Market Report

Thursday November 29th, 2018

March 19 corn closed unchanged at $3.73 ¼ at December 2019 closed unchanged at $3.96. January beans closed down 3 ¼ at $8.87 ¼ and March 19 closed down 3 ¾ at $9.00 ½. March wheat closed down 3 ¾ at $5.07 ¾ and July 19 closed down 4 ¾ at $5.21 ½. Crude oil closed up $1.13 at $51.62.

Eerily quiet day in the markets, “the calm before the storm”, if you will, ahead of the G-20 summit this weekend. It is also “position day” for Dec delivery, which occupied most traders’ attentions today. Flat price trade was on virtual lockdown, excepting some early “Tweet buying” on more positive U.S.-China trade comments. Managed Money were viewed small net buyers of corn today, and will head into tonight short just over 55,000 futures and options.

The weekly export sales report got the day started right, as new business topped 1 mmt for the first time since early October.  1.267 MMT made it on the ledger. Not much new on the weather front. U.S. is warming up again, but snow cover will make fieldwork difficult, if not impossible. South America appears to be entering a dryer trend, particularly after the weekend. In the short-run, this should help get Argentina crops planted, but follow-up precip will need to be monitored heading into December days. North Brazil could actually get a little too wet?  Exchanges report 38% of Argentine corn has now been planted, advancing a 1.4% wk/wk.

Soybeans and products traded slightly lower as the market looks ahead to the weekend G-20 summit in Buenos Aires and specifically, the Saturday Trump-Xi dinner. Trade volumes are thinning out with most participants seemingly positioned the way the want to be and in a ‘wait and see’ mindset. Aggressive up front call buying has been a feature all week and has firmed January option volatility 5.5% from a week ago.

The latest trade news hit the wires mid-morning when the WSJ reported that the US was exploring a deal with China where they would suspend any additional tariffs until the spring in exchange for new talks looking at big changes in Chinese economic policy and at least temporarily de-escalate the trade war. Trump was quoted as saying that he is close to doing something with China on trade, but he doesn’t know if he wants to do it. The general market impact of today’s headlines helped provide underlying support perhaps but lacked anything to change our current range bound market structure. We won’t know how the dinner meeting between Trump and Xi went until later Saturday night or Sunday, quite likely by tweet, which sets the stage for a dynamic Sunday evening opening.

Soybean exports of 629 tmt were within expectations.  Outstanding sales on the books stand at 11.342 mmt vs. 13.304 mmt this time last year while exports to date are 11.915 mmt vs. 21.022 mmt this time last year. That represents a shortfall of 335 million bushels from last year’s pace while the USDA is currently estimating exports on the year to fall short of last year by 229 million bushels. China is looking at stockpiling pork reserves as the threat of swine fever threatens to reduce domestic supply and prices remain relatively low. In today’s export sales report, China bought 3 tmt of US pork so if/when a trade deal is reached you would likely see much more US pork sold to China. In terms of feed, their feed demand has begun to slow down meaning less meal usage which has taken their domestic crush margins into negative territory.

Price action across the wheat complex was similar to that of the past few days. As far as flat price, the markets were unable to build off Wednesday’s solid performance and finished the session slightly weaker. Export sales this morning were in line with expectations but were a little disappointing in that it is looking more and more like we did not win any of the Saudi business from a couple weeks ago, the Egypt and Tunisia business from late last week were not on this week’s report and Bangladesh was absent after a couple of consecutive weeks of picking up some HRS.

The Bloomberg story that came out after the close Wednesday talked about how Egypt is asking traders to delay shipments thru December. So, shortly after the US was able to snag three cargoes of Egyptian business in two separate tenders, the GASC has told grain traders they are not able to open letters of credit before January and said they should delay their shipments. The article says some traders have decided to proceed with shipments for the Dec period rather than paying higher costs for shipping delays by waiting until letters of credit are issued. It does not look to effect last week’s tender where the GASC bought four cargoes, of which one was Russian, one Romanian and two US SRW because that shipment is not until mid to late Jan, but it does affect the tender back on Oct 26 when the GASC bought eight cargoes (470 TMT), of which six were Russian, one was Ukrainian and one was US SRW and the tender back on Oct 3 when the GASC bought three Russian cargoes (180 TMT). The story said GASC was not available for comment over the alleged news.

Anna Kaverman

anna@mercerlandmark.com


November 28, 2018 : Market Summary

Market Report

Wednesday November 28th, 2018

March 19 corn closed up 4 ¾ at $3.73 ¼ at December 2019 closed up 4 at $3.96. January beans closed up 15 at $8.90 ½ and March 19 closed up 15 at $9.04 ¼. March wheat closed up 5 at $5.11 ½ and July 19 closed up 6 ¾ at $5.26 ¼. Crude oil closed down $1.24 at $50.49.

What a difference a day can make in the grain markets these days. China trade deal sentiment went from extreme pessimism Monday to unbridled optimism today. This sent beans to double-digit gains, with corn coming along for the ride. In fact, more Dec corn traded (198k) on the day than there were contracts left open last night (181k). Managed Money funds were viewed net buyers of 15,000 contracts, and they will head into tonight net short 60,000 corn futures and options.

“Tweet markets” continue, though this time, China gets the credit. President Xi of China himself reportedly made a very conciliatory speech in Spain. In it, he claimed China will open wider to foreign investors and protection for intellectual property rights will improve. These are both currently key demands of U.S. trade negotiators. Note, the talk was given in Europe, which China would obviously like to keep on its side if the U.S. trade conflict continues, but it was enough to spark rallies in many commodities. Macro sentiment was also positive on comments from the Fed, with 600+ point gains in the Dow and a sharp break in the US Dollar.

Elsewhere, U.S. harvest progress has likely stalled out for a moment, as the Midwest grapples with bitter cold and the aftereffects of a winter storm. More precip on the way for the Plains, though temps warm back up some. Today’s weather remains mostly favorable for Brazil and Argentina, although with net drying expected in much of Argentina and similar conditions in southern Brazil next week there is potential for a little more interest in long term rainfall.

The soybean market extended its sharp recovery back to the upper end of the daily and weekly chart formations on another fresh surge of trade optimism and short covering ahead of the weekend G-20 summit and Trump-Xi dinner this coming weekend. Trade volume picked up again and was roughly on par with Monday’s big volume, hard down flush.

Today’s headline support originated in Spain where Chinese President Xi made a speech to the Spanish parliament stating that China plans to widen market access for foreign investors and will step up protection of intellectual property rights. Xi also said China planned to import $10 trillion worth of goods over the next five years without specifying which goods. “China will make efforts to open, even more, its doors to the exterior world and we will make efforts to streamline access to markets in the areas of investment and protect intellectual property.”

The market liked this new sign of cooperation and willingness to address intellectual property as it possibly signals that key change in attitude/action that the US has been noting was absent from the latest talks with Chinese trade representatives.  Elsewhere in the news, the USDA flashed a sale of 269 tmt of soybeans sold to unknown.  They also changed a previous announced sales cancellation of 180 tmt from China to unknown. That cancellation was originally reported on October 19th.

The wheat markets had a little bounce overnight, and prices continued to firm during the early stages of the day, but shortly thereafter the rally stalled and the theme for the rest of the morning. There was talk that of the 600 MT of wheat Algeria bought, Cargill sold 240 TMT of it, and that it was probably Argentine. Eventually, that could be good news for US. The more the Argentinians sell to Algeria or whomever, the less they will have to sell to Brazil, and that Brazil will need to come to us.

In a Bloomberg story that came out after the close, a top Egypt wheat buyer is said to be asking traders to delay shipments. That is correct, right after the US is able to snag three cargoes of Egyptian business in two separate tenders, the GASC has told grain traders they are not able to open letters of credit before January and said they should delay their shipments. The article says some traders have decided to proceed with shipments for the Dec period rather than paying higher costs for shipping delays by waiting until letters of credit are issued. It does not look to effect last week’s tender where the GASC bought four cargoes, of which one was Russian, one Romanian and two US SRW because that shipment is not until mid to late Jan, but it does affect the tender back on Oct 26 when the GASC bought eight cargoes (470 TMT), of which six were Russian, one was Ukrainian and one was US SRW and the tender back on Oct 3 when the GASC bought three Russian cargoes (180 TMT).

Anna Kaverman

anna@mercerlandmark.com


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