First Thing Today: U.S. to Export Pork to Argentina for First Time since 1992
Good morning!
Position evening overnight... Corn futures are narrowly mixed as of 6:30 a.m. CT. Soybeans also saw choppy trade overnight, but the market is currently trading low-range and down roughly a penny. Wheat futures, on the other hand, are fractionally to 4 cents higher, with the spring wheat market leading gains. The U.S. dollar index is down slightly, while crude oil futures are posting similar gains.
Chinese demand for U.S. beans (finally) picking up... Chinese demand for new-crop beans from the U.S. is finally showing some signs of life. Its total purchases for 2017-18 stood at just 3.49 MMT as of Aug. 10, the lowest level for this time of the year since 2006 and 46% behind last year at this point. But weekly export sales were stronger than expected for new-crop beans in yesterday's update and USDA has announced bean sales totaling 549,000 MT this week (to China and unknown) via its daily reporting system. Plus, a Chinese trade delegation signed non-binding agreements to buy 3.8 MMT of U.S. soybeans this week, following similar purchase agreements for 12.5 MMT of the oilseed last month. Traders cited by Reuters note that U.S. bean shipments are priced at least $12 per MT below cargoes from Brazil's Parangua port for fall shipment.
SovEcon: Russia to ship a record amount of wheat... SovEcon now estimates Russia will export a record-high 32 MMT wheat in 2017-18, up 2.5 MMT from its previous estimate. This comes a week after the firm hiked its wheat crop estimate by 4 MMT to 77.9 MMT.
Next rounds of NAFTA 2.0 talks set... The second round of NAFTA 2.0 negotiations will be held Sept. 1-5 in Mexico City. Round 3 will happen Sept. 23-27 in Canada. The first round of talks, in Washington, D.C., ends Sunday.
Top White House economic advisor Gary Cohn will remain in the administration... Rumors Thursday that the former Goldman Sachs chief operating officer would be exiting Trump's team sparked an eventual plunge in stocks. Cohn was reportedly upset with President Donald Trump's response to the deadly violence at a white nationalist rally in Charlottesville, Virginia last weekend. The White House sought to counter the speculation, with a White House spokesman saying, "Gary intends to remain in his position as NEC director at the White House. Nothing's changed." The U.S. dollar fell from its highs on the reports.
Report: China struggle to maintain aggressive pace of cotton reserve sales... China will likely produce a 5.62 MMT cotton crop in 2017-18, according to the industry website cncotton.com. Also of note, the website reports that China's cotton reserves will fall to around 5 MMT by the end of the year. But it adds that it will be difficult to maintain the annual destocking pace of 2 MMT to 3 MMT. The current cotton import quota signals there will be at least a 1.25 MMT gap between supply and demand that will need to be filled by reserves, cncotton.com adds.
CME lowers soybean, wheat futures margins... Margins for CME wheat futures will be lowered to $1,200 per contract, down 14.3% from the current $1,400 per contract, while soybean futures margins will be lowered to $1,900 per contract, down from $2,100 per contract. The margins are effective with the close of business today (Aug. 18).
It's official: U.S. to export pork to Argentina for first time since 1992... The U.S. has reached a deal that will allow it to ship pork to Argentina for the first time in 25 years, the White House announced. All fresh, chilled, and frozen pork and pork products from U.S. animals will be eligible for export to Argentina for the first time since 1992. The agreement opens up a market that could be worth $10 million per year for U.S. pork producers, according to the White House. Argentina had banned the U.S. pork, citing food safety concerns. Under the terms of the deal, Argentine food safety officials will visit the U.S. to conduct on-site verification of the U.S. meat inspection system before the exports resume. The announcement comes around four months after Trump raised the issue with Argentina's President Mauricio Macri. It also comes just days after Vice President Mike Pence met with Macri in Buenos Aires. Shipments are expected to start by year-end.
China to probe alleged broiler chicken dumping by Brazil... China has launched an investigation into whether Brazil has been dumping broiler chickens onto its market amid. Chinese producers complain that the country has been selling broilers at prices below market value. China is the world's second largest poultry consumer, and Brazil supplies more than half of its broiler supplies. The U.S. had been the top supplier of chicken to China until 2010 when the country tacked anti-dumping duties on U.S. broiler chicken products. Any duties would be a big blow for Brazil as it ships the country more than $1 billion worth of broilers per year and it is still working to bounce back after a meat safety scandal earlier this year.
South Korea lifts ban on imports of U.S. poultry/products... South Korea has lifted its ban on imports of U.S. poultry and poultry products. It imposed the ban after the detection of highly pathogenic avian influenza (HPAI) in Tennessee earlier this year. USDA notified the World Animal Health Organization (OIE) Aug. 11 that it was now free of HPAI, removing any justification for countries to block U.S. poultry. Several countries imposed partial bans on imports of U.S. poultry/products when a case of HPAI was found in late-February, with some blocking imports from just the area around the outbreak while others imposed broader bans. South Korea blocked all U.S. poultry/products. The country has also announced a temporary measure that will allow U.S. eggs and egg products to enter the country duty-free in the face of a shortage of domestic supplies.
Cash cattle trade mostly around $110... Cash cattle trade picked up across Colorado, Iowa, Kansas and Texas yesterday at $110 and in Nebraska at $109 on Thursday, down $4 to $7 from the week prior. Futures start the day several bucks below these price levels. Also of note, Choice boxed beef values have dropped more rapidly than Select values lately, narrowing the spread between the cuts to just $1.43. Movement has picked up on the price slide.
Building supplies a weight on lean hogs... The latest weight data signals supplies are backing up a bit in the Iowa/Minnesota market, which is concerning given seasonally building supplies. Pork prices have been slipping, tightening packer profit margins. And this is a source of pressure for the cash market. All of this plus recent chart damage signals there is more risk to the downside for the lean hog market.
Overnight demand news... Jordan purchased 50,000 MT of barley from optional origins.
Today's reports:
- 2:00 p.m., Farm Computer Usage and Ownership -- NASS
- 2:00 p.m., Milk Production -- NASS
