Grains
The USMCA is headed to the Senate for review and approval, although it may not get signed until after President Trump’s impeachment trial. The Phase One trade deal is expected to get signed in Washington on January 15th. However, the military strike by the US on an Iranian general has cast some doubt on how China will view that action. The Commitment of Traders report will be delayed until Monday afternoon. The next big market moving event in the grain world will be the USDA’s January 10th final Crop Production, Dec 1 Grain Stocks and the 2020 Winter Wheat Seedings reports.
Corn
Corn inspections were poor, missing the low end of expectations. Inspections are behind the USDA export pace by a very substantial 265 million bushels. Ethanol Production decreased by 17,000 bpd this week to 1,066,000 bpd. Margins took a big hit dropping from 5 cents positive to 6 cents negative. The new trade deal with Japan went into effect yesterday, traders hope this will garner more corn exports to our #2 buyer.
Wheat
Chinese wheat purchases from the EU are expected reach nearly 1.0 mmt this season. The wheat market has shown strength over the past several sessions from crop concerns in Russia and Ukraine, along with ideas that China will be in the market to buy US wheat (once the Phase One trade agreement is signed on January 15th).
Wheat inspections were poor, on the low end of expectations. Inspections are slightly behind the USDA export pace by just 19 million bushels.
Soybeans
Brazil 6-10 outlook suggests 1-2” rain across central /east central portions this week after being mostly dry over the weekend. Argentina continues to be mostly dry with a few scattered showers possible in the 6-10 day outlook. China changed customs regulations on imports of soybeans through some norther border checkpoints, this would ease the path of soybeans into China from Russian, Kazakhstan, and perhaps Ukraine.
Soybean inspections were weak, posting the lowest inspection total of the last 15 weeks and the second lowest total of the year. Inspections are ahead of the USDA pace by 193 million bushels. Soybean sales were really poor this week, posting the lowest total of the year.
Livestock
Cash cattle traded by $2 this week to the $124 area. Packer margins continue to drop. It wasn’t that long ago that insanely good margins of $300+/head were seen. Today margins have dropped to around $25/head.
EnergiesWTI settled at 63.05, above the settle on the Monday after the Saudi oil attack in September (62.90). After Iran’s General Soleimani was killed by a US drone attack outside the Baghdad airport, risk premium was shoved into energies. What happens next is unknown, but Iran’s supreme leader has vowed “severe retaliation.” Meanwhile, the EIA reported some wild inventory figures today with a large draw in crude oil and large builds in diesel and gasoline.
