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June 19, 2019 | Grain Hedge Insights | Kevin McNew | Views: 3

CME Ends Force Majeure for Corn and Soybeans

Most stations on Illinois and Mississippi Rivers have regained ability to load

File Photo

CME Ends Force Majeure for Corn and Soybeans

Effective Tuesday, the CME Group stated that force majeure is no longer in effect at registered Chicago Board of Trade corn and soybean shipping stations on the Illinois River and Mississippi rivers.

On May 2, the exchange had declared force majeure at the shipping stations because flooding had impacted facilities which were unable to load corn and soybeans on barges.

The CME announced that it lifted force majeure "effective immediately" because most stations had regained the ability to load.

What It Means for the U.S. Farmer: At FBN we believe that lifting force majeure for parts of the Mississippi and Illinois rivers should cause local and also river basis to soften. We also believe that flooding could remain a concern as the latest weather model runs show material precipitation in areas that can impact key tributaries.                                        

China Maintains Anti-Dumping Position on U.S. DDGS

China's Ministry of Commerce (MoC) said it will maintain anti-dumping and anti-subsidy tariffs on imports of U.S. distillers dry grains, DDGS, after completing a review that launched in April.

The MoC continued to maintain that importing U.S. DDGS presents “potential damage” to domestic Chinese producers.  

The Chinese will maintain the current anti-dumping tariff structure of 24.2-53.7% and anti-subsidy tariffs of 11.2-12% on U.S. DDGS.

There is widespread speculation that the U.S/Chinese trade talks will include reducing the current tariff structure on U.S. DDGS.

What It Means for the U.S. Farmer:  At FBN we believe that China’s decision to leave the anti-dumping tariff structure intact is not a surprise. Given the current impasse of the U.S./Chinese trade talks we believe that there is no pressing economic or political impetus for China to increase the volume of DDGS as feed inputs. We believe that this decision is more of a negative for the ethanol industry rather than the U.S. farmer as the corn market is focused on future U.S. corn supplies rather than ethanol producer margins. However, we believe that improved ethanol producer margins could assist some local corn basis particularly in locales where ethanol margins are weak and production runs have slowed.   

                                  

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)


 

June 18, 2019 | Grain Hedge Insights | Kevin McNew | Views: 9

Australia Lowers Wheat Exports

Country's new crop wheat production and export program could be beneficial for U.S. wheat producers

Australia Lowers 2019/20 Wheat Exports By 18%  

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) lowered its wheat export forecast for the 2019/20 season as a prolonged drought continues to cause production concerns.

ABARES predicts wheat exports would total 11.7 MMT in the crop year beginning in July, down from its previous estimate in March of 14.2 MMT.

Exports and production are lowered by 18% and 11% from March.

Estimated exports are still 50% above 2018/19’s 9 MMT.  

Australia's east coast, where most of the wheat is for domestic consumption, has recorded less than 40% of typical rainfall levels over the last six months.  The western wheat producing region has received cooler temperatures and has better chances of production.

Australia is one of the top 10 wheat exporters in the world.  The country’s status of a global export has declined in recent years as drought has pushed production lower.       

What It Means for the U.S. Farmer: At FBN we believe that ABARES lowering Australia’s new crop wheat production and export program could be beneficial for the U.S. wheat producer. While the U.S. white and soft wheat crops are suffering from a drought and rain we believe that it is possible that low protein and HRW and HRS could benefit from increased Asian feed wheat export demand. 

 

   

U.S. Crop Progress Report: Supportive Corn and Soy;  Bearish Spring Wheat

The USDA June 17 Crop Progress report showed 92% of the corn corp as planted, or 8% unplanted.  100% planted is the 5 year average.

The 8% equates to 7.192 million acres of corn acres unplanted.  

These 7.19 million of unplanted corn acres is just ahead of the USDA’s June 28th Acres report which is the government’s followup to the March Prospective Plantings report.  

Corn condition was unchanged from last week at 59% rated “Good/Excellent”

Reported planted soybeans are 77% vs the 5 year average of 93%.  

13% unplanted translates to 11 million acres.  Eastern corn belt states along with Missouri and S. Dakota remain behind their 5 year averages.   

55% of soybeans have emerged vs. the 5 year average of 84%.

Soybean condition scores will be reported next week.  

Spring wheat condition scores look good.  The only state with “very poor/poor” is Montana with 4%.   

Winter wheat harvest below the 5 year averages in OK, KS, IL and IN.

What It Means for the U.S. Farmer: At FBN we believe that the market will focus on the corn condition scores first and then the planting pace and emergence.  Given the outstanding acres we expect the USDA to lower acres in their June 28 acres report. The soybean planting place and lack of acres planted in key states remains a concern.  We believe that as the end of June approaches this can be supportive for the complex.

                  

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

June 17, 2019 | Market Intel | Megan Nelson, Economic Analyst, American Farm Bureau Federation | Views: 9

Unleashing Broadband on Rural America Leads to Economic Benefits

If access matched producer demand, U.S. ag would realize benefits amounting to nearly 18% of total U.S. market production, or $64.5B annually

According to USDA’s “A Case for Rural Broadband,” if access to broadband and adoption of digital agricultural technologies matched producer demand, U.S. agriculture would realize benefits amounting to nearly 18% of total U.S. market production, or $64.5 billion annually, based on 2017 levels. The report, published by the American Broadband Initiative, analyzes the possible economic benefits of bringing e-connectivity to the heartland and, more importantly, what needs to be done to make it happen.

From the way producers store and ship commodities to the way consumers purchase their food, the introduction and widespread usage of the household refrigerator has irrevocably changed the food supply chain system.  A similar shift is upon us with the advent of digital technology and next generation precision agriculture, resulting in ever-increasing productivity with fewer inputs, better market access and healthier rural communities. Just as electricity allowed for refrigeration, to realize the benefits of this new digital technology, high-speed broadband service must be available everywhere.

Benefits

Row Crops

The highest rate of adoption for precision technology used to improve yields and reduce costs is in the already highly mechanized row crop sector. USDA estimates connected technologies in row crops could result in a $13.1 billion gross benefit annually from next generation precision ag. Technology for improved planning, such as microclimate modeling, yield monitoring and precision seeding, is estimated to have a combined potential annual gross benefit of $4.2 billion, with $1.1 billion attributable to access to broadband services. On the production side of new technologies, the potential is even greater at $6.7 billion in possible benefits derived from precision agriculture, with $2.5 billion attributable to broadband. With an average dependence of 34% on broadband services to utilize these new technologies, the key to unlocking these significant gains is full deployment and adoption of broadband infrastructure. Figure 1 outlines the potential benefits for row crop production and planning technology compared to the potential attributable to broadband with the percent of technology dependent on broadband.

Specialty Crops

Like row crop growers, specialty crop farmers could also see major gains with the adoption of new production and planning technology.  Total annual benefits for next generation precision ag for specialty crops is estimated at $13.3 billion. With a possible increase of $8.5 billion, market coordination efforts will likely get the biggest boost from the adoption of digital technologies. Of the new opportunities in market coordination, direct-to-consumer sales are estimated to post a potential annual gross benefit of $6.4 billion, with $3.2 billion in potential attributable to broadband. Specialty crop producers can shorten the supply chain by utilizing digital platforms. USDA estimates a revenue increase of 50% per unit of apples, 649% per unit of salad mix and 183% per unit of blueberries. Figure 2 illustrates the breakdown of potential financial benefits from next generation precision ag and the amount attributable to access to broadband services.

Livestock and Dairy

According to the USDA's estimates, the livestock and dairy sectors are poised to benefit the most from next generation precision ag, with annual potential gross benefits totaling $20.6 billion. The majority of estimated benefits come from the production side and are focused on increased efficiency of animal care. Utilizing Bluetooth technology, animal wearables transmit general health data directly to the producer, resulting in a 15% reduction in medication per animal, as well as a shortening of the cattle finishing process by four to six weeks. Technological advances in general health monitoring alone are estimated to generate $8.8 billion in annual gross benefits. Unsurprisingly, as poised as producers in the livestock and dairy sectors are to reap enormous benefits from next generation precision ag, they are also the most dependent on reliable high-speed broadband to enable new technological advancements. Figure 3 outlines the potential benefits for livestock and dairy compared to the potential attributable to broadband along with the percent of technology dependent on broadband.

Strategies for Action

As with electricity, the dawn of digital technology has brought an unimaginable amount of change to every aspect of our lives. Precision agriculture has led to 7.5% fewer people at risk of going hungry in developing countries and an up to 80% reduction in the application of crop protection tools. However, while new technology is able to inform and improve business decision making, without widespread adoption of next generation precision agriculture tools and access to broadband infrastructure, these benefits cannot be realized.         

USDA has outlined key priorities for strategic action planning involving improved broadband deployment, incentivizing innovative technologies and creating environments for innovation, strategic funding and communication. To bring broadband services to even the most remote areas, public and private entities must work closely with communities to determine specific needs and challenges. Reducing barriers in federal processes to access government assets is one of the cornerstones of the American Broadband Initiative and continues to be a focus at the federal level. The task of actualizing broadband infrastructure relies on funding for deployment as well as for new innovations that can lead to long-term successes for the entire sector.

Summary

USDA’s report puts the hypothesized potential benefits that broadband technology and infrastructure could bring to rural areas at $64.5 billion annually. Increasing the availability of broadband to all of rural America, coupled with increased precision agriculture adoption are estimated to increase the gross economic benefits to row crop agriculture by 4%, adding up to $5.9 billion, increasing 19% for specialty crops, or up to $8.6 billion, and 7%, or up to $23 billion, for livestock.

One limitation of the report is it does not incorporate the implementation costs, which will inevitably be incurred by rural residents, service providers and/or state and federal governments. As such, this report should be seen as a tool to illustrate the potential of broadband technology, rather than the only source for future investment-related decision-making.

USDA leaves us with this call to action - spread the word. For the full economic benefits of high-speed broadband to be realized throughout rural areas, adoption rates of precision agriculture tools and next generation technology must be much higher. All potential benefits are estimations based on rigorous research; however, producers must perform their own cost-benefit analysis to see where these emerging technologies fit in their operations.

Contact: Megan Nelson, Economic Analyst

Phone: 202-406-3629

Email: megann@fb.org

June 17, 2019 | Grain Hedge Insights | Kevin McNew | Views: 15

Corn & Soybeans Export Prices Rise

Spot basis bids for corn and soybeans shipped by barge to the U.S. Gulf Coast rose again because of flooding

NOPA May Crush Estimated 162 MBU, -2 MBU YoY

Monday, May 17 the National Oilseed Processors Association (NOPA) releases their May soybean crush data.  A Reuters poll suggests that the soybean crush rate was down slightly from May 2018 and the second largest volume for the month of May.  

Analysts are looking for 162.474 MBU of soybeans processed in May down from 163.573 in May 2018.   

April soybean crush was 159.99 MBU.

Soyoil supplies among NOPA members at the end of May were expected at 1.784 billion pounds which would be the first decline in six months. Oil stocks were reported at 1.787 billion pounds at the end of April and 1.856 billion pounds at the end of May 2018.

What It Means for the U.S. Farmer: Similar to 2018, the monthly soybean crush pace during 2019 has been impressive.  However we believe that the U.S. cannot “crush” it’s way out of a record breaking 1.045 billion bushel carryout.  We believe that the reported decline in soybean oil stocks should be supportive of the soybean oil leg which has lagged behind meal recently.                                           

 

U.S. Corn and Soybean Export Prices Rise on Mississippi River Flooding

Spot basis bids for corn and soybeans shipped by barge to the U.S. Gulf Coast rose again on Friday on tight near-term supplies and concerns about river shipping delays because of flooding.

Large sections of the Mississippi River and tributaries have been closed to navigation because of high water and dangerous currents resulting from torrential rains.

Shipping restrictions in other sections of the Mississippi river system that includes limits on the number of barges per towboat, have caused further delays.

St. Louis harbor on the Mississippi River, which has been since May 23 may reopen to shipping later this week.

Locks above St. Louis have been closed and could reopen in the next 10 days.     

What It Means for the U.S. Farmer:  At FBN we believe that the rise in export corn and soybean prices out of the New Orleans area is a negative for the U.S. corn and soy export programs which have been struggling against foreign competitors.                  

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

June 14, 2019 | Grain Hedge Insights | Kevin McNew | Views: 15

EU Barley Production to Increase

Timely rains, cool weather across much of EU has helped aid crops

EU Barley Production To Increase 15% YoY After 2018 Drought

Europe is facing a strong rise in its 2019 winter barley harvest following massive drought damage a year before, bringing improved supplies for farmers.

European agri-consultants, Strategie Grains, is estimating that EU winter barley production will increase 15% YoY to 30.86 MMT.

French barley production is estimated to rise 4% YoY while German production is forecasted at 35.5% YoY increase.  UK barley production is expected to rise by 20% YoY. Polish production is expected to increase 7% YoY.

Timely rains and cool weather across much of the EU has helped aid the barley, wheat and corn crops.  

Barley is used as an animal feed input throughout much of Europe, the Middle East and the Baltics.     

What It Means for the U.S. Farmer:  At FBN we believe that EU’s emergence from a drought in 2018 can be a negative for the U.S. wheat and corn export programs.  Because barley is used as a domestic and exportable feed component, we believe that the forecasted production increases will start to “pencil into” EU export grids.  Increased feed barley exports has the ability to displace U.S. corn exports.

Canadian Government Offers Aid Package for Canola Producers

The Canadian government is reporting increased access to an insurance program for canola exporters looking to find new buyers in light of trade tensions between Canada and China.

The government is working to provide additional credit insurance for grain exporters.  A government led working group was created to assist the canola industry has been asking the Canadian government to help alleviate default risks while exporters looking for alternative export markets could incur.  

China is Canada’s largest canola export market and has blocked imports of canola from selected companies since March over a continuing dispute that involves Canada’s allowing the extradition of the CFO of a Chinese technology company, Huawei Technologies, to the U.S.  

What It Means for the U.S. Farmer: At FBN we believe that China’s non-science based ban of Canadian canola exports from selected companies continues to drag on the entire supply chain.  We believe that the Chinese import ban was a primary catalyst that helped Canadian producers switch acres from canola to wheat for the 2019/20 crop year.  We believe that Canada’s growing wheat acres will increase the regions wheat supply and is a negative for the DNS producer in the northern states.      

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

June 13, 2019 | Grain Hedge Insights | Kevin McNew | Views: 16

USDA to Adjust Soybean Estimates in July WASDE

Acres data should also manifest in USDA’s June 28 Acre report

Export Sales Announcement

Private exporters reported to the U.S. Department of Agriculture export sales of 175,000 metric tons of corn for delivery to Mexico during the 2019/2020 marketing year.

USDA to Adjust 2019/20 Soybean Estimates in July WASDE

During a presentation to the International Grains Council on June 12, Robert Johansson, Chief Economist USDA, said that the government will be adjusting the U.S. 2019/20 supply numbers in the July WASDE.  

In the June WASDE the USDA did not adjust soybean’s supply or demand calculus for the 2019/20 crop year from the May report.  

"I think we didn't have information to go on right now to change those soybean numbers, "Johansson said. "I think we will see adjustments being made to the soybean crop in the July WASDE. The conventional wisdom is that some of the corn acres would translate into bean acres and that translates into lower soybean prices."  

The government lowered old crop export use by 75 MBU taking the ending stocks to a record high of 1.070 BBU.

What It Means for the U.S. Farmer: At FBN we were skeptical of the USDA’s 2019/20 treatment of the soybean supply and demand calculus in the June WASDE and believe that leaving the supply side unchanged was an unrealistic assumption. Given corn’s historically slow planting pace, FBN was expecting the government to raise planted soybean acres by 1.5 million acres in the June WASDE. We believe that the comments made by the USDA’s Chief Economist Johansson reflect a realistic scenario. We also, however, expect acres data to manifest in the USDA’s June 28 Acre report.

Chinese Delaying 2 MMT of U.S Soybean Imports from July to August

Beijing's state-owned companies are attempting to delay U.S. soybean imports from the U.S. from being shipped from July until August.

The exports in question reflect the 7 MMT that was purchased by China in December and January while the trade negotiations between the two countries was still in progress.  

Delaying the exports until August does not present immediate concerns but further delays into September could create problems and impact prices as new crop export volume increases during the fall.  

What It Means for the U.S. Farmer: At FBN we were cautious of the announcement made last week about China’s desire to import the remaining 7 MMT of outstanding U.S. soybean sales.  This latest development appears to justify our approach. Canceling the shipments would most likely result in financial penalties but we believe that further delays has the ability to pressure local basis levels which would be a negative for the U.S. producer.             

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

June 12, 2019 | Grain Hedge Insights | Kevin McNew | Views: 18

June 2019 WASDE Results Are In

Bullish Corn, Bearish Soybeans

USDA’s June WASDE:  Bullish Corn, Bearish Soybeans

The USDA’s June WASDE report saw the biggest May-to-June yield drop on record.  The 11 bpa yield reduction for new crop 2019/20 corn, 166 bpa, was combined with a 3 million planted acres cut which helped push the 2019/20 production estimate lower by 1.35 billion bushels to 13.686 billion bushels.  

The government lowered 2018/19 old crop corn use by removing 100 MBU from exports and bringing the carryout to 2.195 billion bushels.  

New crop corn’s ending stocks number was lowered by 811 MBU to 1.675 MBU and a stocks-to-use ratio of 11.7%.

Old crop soybeans use was reduced on a 75 MBU cut to exports bringing the ending stocks number to 1.070 BBU.  

The USDA did not adjust the supply or demand sides of the 2019/20 soybean balance sheet which leaves the ending stocks number a 1.045 BBU.

New crop wheat production was raised as the USDA increased HRW production by 2% from May to 794 MBU and lowered soft wheat production by 2% to 258 MBU.  

The government also raised the all-wheat feed and residual number to compensate for lower corn use in 2019/20.  The all-wheat carryout was lowered to 1.072 BBU.

What It Means for the U.S. Farmer:  At FBN we believe that the corn production numbers were bullish as production and stocks are being reduced.  We believe that the yield cut is the first adjustment and that there is a high probability that the government will lower planted acres further in the June 28 USDA Acres report. We also believe that the soybean number was bearish as neither the demand or supply numbers for new crop 2019/20 were adjusted. We think that the government will raise planted acres in their June 28 report. We believe that the wheat numbers were bearish HRW and supportive SRW.

USDA May Allow Trade Aid Payments on Unplanted Acres

Secretary of Agriculture Sonny Perdue said that the U.S. Department of Agriculture is looking into ways to allow farmers who have been unable to plant crops due to rains and waterlogged fields to qualify for farm aid payments.

The government agency is exploring options that would allow farmers that file insurance claims on "prevented planting" policies to remain eligible for a partial payment under its $16 billion aid package.  However, farmers will need to plant an eligible cover crop, a practice typically intended to prevent soil erosion.

While the USDA is not legally authorized to make Market Facilitation Program payments to producers for acreage that is not planted, the government is exploring “legal flexibilities” to provide a minimal per acre market facilitation payment.  

What It Means for the U.S. Farmer: At FBN we believe that any program designed to provide the U.S. farmer with assistance during these difficult and confusing times is a positive.  However, with a myriad farmer aid programs that have been announced over the last 45-60 days we recommend contacting your FBN farm market advisor or local FSA office to help address specific questions.      

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

June 11, 2019 | Grain Hedge Insights | Kevin McNew | Views: 17

Slowest Corn Planting Pace on Record

USDA Releases Crop Progress Report

Reminder: USDA’s June WASDE report is published Tuesday, June 11 at 11:00 CST

 

USDA’s June 10 Crop Progress Report: Slowest Corn Planting Pace

The USDA released their crop progress report for the week ending 6/9/2019. The report showed the slowest U.S. corn planting and emergence pace on record.  The corn planting pace was reported at 83% planted and is 8% below the next slowest year, 1995, at 91%.

Put another way, as of June 9 the USDA reported that 17% or 15.7 million corn acres are left unplanted.

Corn emergence was reported at 62% which was behind the next lowest level of 85% in 2013.

Reported corn condition scores showed the percentage of the crop rated “very poor/poor” at 9% while 59% of the crop was rated as “good/excellent”.  

Soybean plantings were reported at 60% complete.  Only years 1981, 1995 and 1996 were slower and were all “tied” at 59% completed.  

Soybean emergence was reported at 34% which was the slowest on record.  

Spring wheat planting and emergence are on pace with the 5 year averages.  

Soft winter wheat scores showed continued weakness in Illinois and Ohio where 27% and 33% of the crops were reported as “very poor/poor”.  

Hard wheat condition scores have been trending “positively” with Kansas reporting the largest percentage rated  “very poor/poor” at 11%.

What It Means for the U.S. Farmer:  At FBN we believe that both the corn and soybean scores are supportive.  We believe that the corn data provides the USDA with enough information to materially lower the planted acres and yield numbers in their June WASDE on Tuesday, June 11.  Soybeans still have more time before the prevent plant date so acres can still be added.

Argentina Able And Ready to Assume Mexican Import Demand

If trade strife continues between the United States and Mexico despite a deal struck on Friday, Argentine grain exporters have the ability to meet Mexican food demand.   

The U.S. government called off a threatened 5% tariff on all Mexican goods when Mexico promised to do more to stem the flow of Central American immigrants into the United States. On Monday, President Trump warned he could revive the tariffs if Mexico's Congress does not approve the plan.

The United States has traditionally supplied more than 95% of Mexico’s corn imports and around 70% of its wheat imports.

Prior to the current tariff threat, trade turmoil beginning with President Trump’s threat to withdraw from the trilateral North American Free Trade Agreement had prompted Mexico to talk about broadening its suppliers.

What It Means for the U.S. Farmer: At FBN we believe that Mexico’s desire to diversify its agricultural commodity supply chain comes at an opportune time.  The U.S.’s 2019/20 corn crop is off to a poor start while Argentina and Brazil are having bumper corn crops.  While the cost of shipping corn and wheat from the U.S. to Mexico has only recently declined, the FOB price of corn in Argentina combined with the strength of the Mexican peso over the Argentine peso exchange rate provides Mexico with import options.  If the Mexican congress fails to ratify the trade deal we believe that exports could shift away from the U.S. which would be bearish for the U.S. producer.                                  

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

June 10, 2019 | Grain Hedge Insights | Kevin McNew | Views: 26

Unapproved GMO Wheat Growing in Washington State

Unauthorized GMO wheat has not entered the food supply and does not appear to pose any threats

USDA Investigates Unapproved GMO Wheat in Washington State

The U.S. Department of Agriculture has confirmed the discovery of unapproved, genetically modified (GMO) wheat plants growing in an unplanted agricultural field in Washington state.
There was no evidence the wheat had entered the food supply, the USDA's Animal and Plant Health Inspection Service said in a statement on Friday. The wheat is resistant to glyphosate, a widely used herbicide commonly referred to as Roundup.
There are currently no commercially approved genetically modified wheat varieties, and incidences of rogue plants are rare. However, unapproved plants were found in 2018 in Alberta, Canada, in 2016 in Washington state, in 2014 in Montana and in 2013 in Oregon.
A Bayer Crop Science spokeswoman said the latest discovery may have occurred on the site of a former field trial.
What It Means for the U.S. Farmer: At FBN we believe that this story is interesting and needs to be monitored. At the moment, the unauthorized GMO wheat has not entered the food supply and does not appear to pose any threats.    

    

Chinese May Soybean Imports Decline 24% YoY

China brought in 7.36 MMT of soybeans in May, down from 9.69 MMT last year, according to data from the General Administration of Customs. The May figure was also down from 7.64 MMT in April, when shipments had jumped as buyers delayed cargoes on a tax change.
China imported 31.75 MMT in the first five months of 2019, down 12.2%YoY.
Soybean shipments in the coming months were expected to jump significantly from May, even while African swine fever outbreaks continue to cut demand.
China plans to stockpile up to 7 MMT of U.S. cargoes booked during the earlier trade truce in preparation for a protracted trade war.
China has been aggressively importing soybeans from Argentina and Brazil.
What It Means for the U.S. Farmer: At FBN we believe that Chinese soybean demand from the U.S. should continue to decline.  African swine fever (ASF) and poor crush margins resulting from a 25% tariff make soybeans from Brazil and other countries a better purchase.  We believe that China’s decision to import the remainder of the 7 MMT that the country purchased in late December and early January is a positive but the U.S. soybean complex is still facing a record large ending stocks number.         

                            

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

June 07, 2019 | Grain Hedge Insights | Kevin McNew | Views: 37

Still No Agreement Between U.S. and Mexico

Tariffs are scheduled to be implemented Monday morning

No Agreement Between U.S./Mexico; Tariffs Implement Monday, June 10   

President Trump said progress was being made in border-security talks between Mexican and U.S. officials and warned that Mexico must “step up to the plate” if it wants to head off tariffs planned for next week on $350 billion in imports.  

Officials held a second day of talks in Washington on Thursday, after negotiations the day before ended without a deal.

Mexico and the U.S. are each other's largest trading partner.  Mexico is the largest export destination for U.S. row crops, pork and poultry.

Tariffs are scheduled to be implemented Monday morning at 12:00 a.m.

Mexican President Obrador said Thursday morning that the country’s delegation had presented a plan to address immigration issues to their counterparts in Washington, and said he was optimistic a deal would be struck to avoid the tariffs.

Mexico hasn’t detailed in public precisely what it is offering to do.  President Obrador said details of his plan would be released Saturday, June 8.  

What It Means for the U.S. Farmer: At FBN we believe that absent any type of agreement or DETAILS from Mexico about how country may respond to U.S. tariffs is a bearish input. We also believe that absent any information that it may be difficult for some futures market participants to be long into the weekend.   

 

Canadian Wheat Exports to China at 14-Year High

Canada has shipped the most wheat to China in 14 years as Chinese buyers shunned the United States.

China bought 1.5 MMT of wheat from Canada from August 2018 through April 2019, nearly double the pace a year earlier and the most since 2004-05.

China is largely self-sufficient in wheat production but does import higher protein wheat classes.  

China imposed a 25% tariff in 2018 on U.S. wheat in a trade war with the United States, which effectively halted sales and shipments to what was the fourth largest U.S. export market the previous season for high-protein U.S. hard red spring wheat.

42,000 tonnes of U.S. wheat exports to China so far this year as of April are the lowest in 11 years.  

What It Means for the U.S. Farmer: At FBN we believe that China’s 25% tariff on U.S. wheat exports has been another trammel for the U.S. farmer to overcome.  We believe that China not importing U.S. spring wheat, HRS, is part of the reason that the ending stocks number for 2018/19 has risen to 313 mbu which is the largest amount since the 1987 marketing year.      

 

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

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