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Export sales released this morning showed disappointing results in corn, beans, and wheat. The most exciting piece of the report was that China bought 77k MT of pork vs 5k MT a year ago. The USDA is projecting a YoY decline of 134 million head of pigs, equivalent to the entire US pig production. FT reporting that the US and China have agreed to set up “enforcement offices” to ease concerns that either side will not follow through with the agreed upon deal. Still no agreement yet, and until then would not expect any big changes. Lower board this morning and volume was light. Nearby bean contract back below $9 and the forward curve has stayed relatively intact. Technicals are bearish in the short-term for the soy complex, showing weakness when on the moving averages. Not much movement in the spreads, sn/x remains depressed due to a plentiful domestic supply, South American crops will be big, and no demand growth in China. US weather remains wet, but should not be of any consequence. Below are a few seasonal charts of planting progress to illustrate how quick the farmer can plant. Last year’s line is bolded white.
May corn finished up ¼ of a cent, beans up 1.5 cents, and wheat down 2.75. Generally benign session today going into a long weekend. More pork exports were reported to China which might end up being a timely add in to a trade deal solving the issues of lowering trade deficit and stabilizing the price of pork. The WTO ruled in favor to the US vs China in a complaint against the Chinese use of Tariff Rate Quotas. One would assume this is helpful to the US hand when it comes to the trade agreement. But, its not really the time for assumptions…
Market is still anxious for the outcome of the trade war and funds are still grinding their short position axe. Big crops down south (are getting bigger) with the US farmer not far from planting are making supply forecasts look massive.
Rain in the forecast keeping ground wet and field work minimal. Market will continue to build risk premium until forecast dries out for several days. Think the wet weather will have to persist few more weeks to make funds get out of the short positions. Or a trade deal.