| Good morning! Corn, soybeans and wheat push higher overnight… Corn futures rallied overnight and are 2 to 3 cents higher in early trade. Soybeans are also posting solid gains of 5 to 7 cents. Winter wheat futures have pushed 4 to 8 cents higher, with the SRW market leading gains. Spring wheat futures are 3 to 4 cents higher. The U.S. dollar index and crude oil futures are both under pressure. U.S., China continue to signal push toward Phase 1 of trade deal… U.S. and Chinese statements on the efforts to reach a Phase 1 trade deal continue to signal both countries are engaged and focused on getting the deal completed. China wants to reach a phased trade deal with the U.S. as soon as possible which would allow for the removal of tariffs, according to Ministry of Commerce Spokesman Gao Feng. "The final goal of both sides' negotiations is to end the trade war and cancel all additional tariffs," Gao said. U.S. Treasury Secretary Steve Mnuchin said Wednesday that negotiators from both sides are working on the text, something that Gao confirmed was taking place between working-level representatives. President Donald Trump said that he would not likely sign the Phase 1 deal with China until he and President Xi Jinping meet at the Asia-Pacific Economic Cooperation (APEC) summit in Santiago, Chile, Nov. 16-17. China to remove business restrictions on foreign banks, brokerages and others… China will remove restrictions on foreign banks, brokerages and fund management firms, according to results of a cabinet meeting held by Premier Li Keqiang. China last week set a timetable for opening its futures, brokerage and mutual fund sectors fully to foreign investment next year. There was no statement made on the effects removing the restrictions would have. On Tuesday the cabinet relaxed management rules on foreign insurers and banks to provide easier access to China. Efforts by local governments to attract more foreign investment and allow foreign companies more flexibility to borrow funds from overseas, the cabinet said, adding that the country will not allow forced technology transfers, the latter a key issue in the U.S./China trade dispute. However, China still has not yet opened up its market to things like allowing U.S. credit card companies to conduct yuan clearing business in China. China has signed a lease that effectively grants it control of the island of Tugali in the South Pacific… The New York Times reports, “Under a secretive deal signed last month with a provincial government in the Solomon Islands, a Beijing-based company with close ties to the Chinese Communist Party has secured exclusive development rights for the entire island of Tulagi and its surroundings. The lease agreement has shocked Tulagi residents and alarmed American officials who see the island chains of the South Pacific as crucial to keeping China in check and protecting important sea routes. It is the latest example of China using promises of prosperity to pursue its global aspirations — often by funneling money to governments and investing in local infrastructure projects that critics call debt traps for developing nations.” Germany won’t block Huawei… Germany confirmed that it would not block Huawei, a Chinese telecoms manufacturer, from its networks, despite pressure from the American government to do so on security grounds. American allies such as Australia and New Zealand have already banned Huawei, while others, notably Britain, have yet to make a decision. Meanwhile, German Chancellor Angela Merkel said today that Germany would make relations with China a key issue during its 2020 EU presidency. Germany takes over the rotating six-month presidency in the second half of 2020. Consultancy: Smaller global crop and improved competitiveness to bolster EU wheat exports… Strategie Grains once again lifted its forecast for soft wheat exports out of the European Union, citing a smaller global crop than anticipated (especially in drought-hit Argentina and Australia) and competitiveness on the global market. Strategie Grains also said Russia lacks the capacity to accommodate much more export demand than already forecast, shifting some business to the U.S. and Europe. The consultancy now projects the EU will export 27.3 MMT of wheat outside the bloc, a 1.6 MMT increase from its September estimate and an impressive gain from its 21.9 MMT forecast back in July. The consultancy also increased its crop estimate by 1 MMT to 145.5 MMT, a dramatic increase from 2018-19’s 127.1 MMT crop. Carryover stocks edged down 300,000 MT this month to 12.7 MMT. Vietnam again halts wheat imports from Russia… Vietnam has asked Russia’s ag safety watchdog to temporarily suspend its issuance of wheat export certificates, Yulia Melano, a spokeswoman for the watchdog said today. She continues that “it is normal practice for importing countries to carry out additional checks” and notes that her office is working with representatives from Vietnam to resume trade. Last year Vietnam slashed its purchases after finding thistle seed in imports. This halted Vietnamese purchases of Russian wheat from November 2018 to June 2019. In July and August, Vietnam imported 229,100 MT of wheat from Russia. Additional talks on the matter are scheduled for oct. 20-22. USDA to resurvey farmers in Minnesota and North Dakota after recent snow… USDA announced it will resurvey producers in Minnesota and North Dakota regarding harvested corn and soybean acres following recent snowfall, USDA announced yesterday. If warranted, USDA’s National Agricultural Statistics Service said it would publish any changes to the harvested acreage figures for those states in its Nov. 8 Crop Production Report. Pelosi comments still positive on prospects for USMCA... While most have focused on Democratic leaders walking out of a meeting with President Donald Trump where both sides have traded accusations about someone suffering a “meltdown,” House Speaker Nancy Pelosi (D-Calif.) made additional statements that indicate she is still working toward House approval of the U.S.-Mexico-Canada Agreement (USMCA). Perdue: Disaster aid funding soon… USDA Secretary Sonny Perdue said farmers should see disaster aid funding soon. “Farmers who are eligible for individual disaster aid that signed up last month, the money should start flowing in this week.” Perdue said earlier this week in Georgia, adding USDA is working with the states on block grants to cover damage to non-traditional items like timber and animal facilities. Beige Book notes deterioration in manufacturing and agriculture… A growing number of businesses have lowered their outlooks for the next year, with companies in the Midwest and Great Plains especially downbeat, according to the Fed Beige Book’s report of conversations with local business leaders around the United States. Overall, the U.S. economy has grown at a “slight to modest pace” since the previous report last month, with deterioration in two familiar areas: manufacturing and agriculture. Cargill to expand, update Ohio crush facility… Cargill announced it will invest approximately $225 million to expand its integrated crush and refined oils facility in Sidney, Ohio. The company says the move will enable it to better serve farmers in the area and to meet rising demand for protein and refined oils. The upgraded plant will be able to unload trucks much more quickly and the added capacity will expand Cargill’s crush footprint, the company notes. Cargill expects to add around 12 full time jobs in association with the upgrades. U.K., EU agree on draft Brexit deal… Britain and the EU agreed on a draft Brexit deal ahead of a crucial summit. Any final deal must still be formally approved by the bloc and ratified by the European and U.K. Parliaments. The U.K. Parliament meets on Saturday. However, the Democratic Unionist Party (DUP) said it could not support the deal as it stands. DUP support is seen as crucial if Prime Minister Boris Johnson is to win Parliament's approval for the deal in time for his Oct. 31 deadline. Johnson’s predecessor, Theresa May, reached an accord with the EU, only to see it rejected three times by lawmakers. The British pound surged this morning to $1.29, suggesting that investors believe this deal will be passed by Parliament. Ag ministry official says China’s hog production to return to normal next year… China’s hog production capacity will likely bottom this year, but production will likely rebound to normal pig numbers in 2020, forecasts Yang Zhenhai, director of the husbandry and veterinary bureau of China's ag ministry. African swine fever decimated the country’s herd, with China officially reporting numbers down 40% and analysts saying that figure is more likely in the 50% range. Yang explains that policies and market factors have boosted confidence in pig farming and “enthusiasm for production among small and big farmers is further improving.” He says production at farms slaughtering more than 5,000 pigs per year have recovered rapidly, with inventories up 0.6% from August to September to 44.46 million animals. He also notes that production and sales of pig feed are rebounding, with feed output up 10% in September. Analysts say that timeframe is unrealistic… Most analysts believe Yang’s forecast is overly optimistic, especially considering no vaccine for ASF is available. “If the disease can stabilize and doesn't reoccur, stocks might start to recover," noted an unnamed analyst with a Chinese consultancy cited by Reuters, but even then, they would not reach normal levels until at least the second half of 2020. Pan Chenjun, a senior analyst at Rabobank, expects the herd to continue to drop in the first half of 2020. She notes that companies who have restocked farms have seen it reoccur and many small farms lack the capital or will to rebuild their herds. Further, it takes around 18 months to build, stock and produce pits at a new farm, pan continues. COFCO Meat Holdings Ltd. reports big drop in Q3 hog production, pork sales… State-owned COFCO Group, China’s largest food processor, manufacturer and trader, reported hog production of 265,000 head this week, a 60.4% decline from year-ago. Its fresh pork sales also dropped notably (28.1%) from year-ago levels in the quarter to 35,000 MT. Tyson to eliminate ractopamine from its supply chain, positioning it to compete for Chinese business… Tyson Foods Inc. says that from February forward, it will stop buying U.S. hogs with the growth hormone ractopamine, the company announced Thursday. The feed additive is banned in China. This reflects a change in strategy for Tyson, company watchers say. Previously, it profited by filling holes in U.S. supplies left by rivals like Smithfield Foods and JBS USDA who were shipping American pork to China. Now, all three U.S. pork processors are competing for Chinese business. JBS USA announced plans to remove ractopamine from its hog supply chain earlier this month. Smithfield, which is owned by China’s WH Group, raises pigs on company-owned and contract farms without the drug, but it still processes pigs from other farmers who use ractopamine. More wild boars test positive for ASF in South Korea… Two wild boars found dead near South Korea’s border with North Korea have tested positive for ASF, bringing the total number of cases in wild boars to nine, according to the National Institute of Environmental Research, which is controlled by the country’s environment ministry. South Korea has mobilized soldiers and civilians to hunt wild boars near the border and plans to install electric fences in the area. Light cash cattle action at higher prices… December live cattle ended yesterday on a strong note, resulting in a bullish reversal for the day. Followthrough buying is likely today, but the market is nearing tough resistance at the July high. The market is a bit uneasy about how long the rally can continue without a setback. Cash cattle trade picked up a bit in Iowa/Minnesota at $110 to $111, up $1 to $2 from last week’s action in the state. Trade has yet to begin in other states. Hogs see some profit-taking, but trend remains up… Nearby lean hog futures set back at midweek, but the uptrend remains intact. The market remains confused about Chinese assertions of large U.S. pork purchases that don’t seem to align with U.S. record-keeping. And this week, the market will have to wait until Friday for an update on weekly export sales. The pork cutout value slipped 34 cents on Wednesday on a $5.53 drop in belly prices and a $1.28 slide in butts. Overnight demand news… Egypt purchased 285,000 MT of wheat from Russia, 60,000 MT of wheat from France and 60,000 MT of wheat from Ukraine. Saudi Arabia’s state grain buyer is seeking 595,000 MT o whet in a tender. Today's reports: |
