February 21, 2019 | Grain Hedge Insights | Kevin McNew | Views: 1240

China to Propose $30 Billion in Annual U.S. Ag Imports

The futures markets seem to be taking news more seriously than previous reports from the White House

China to Propose $30 Billion in Annual U.S. Ag Imports

China To Propose $30 Billion in Annual U.S. Agricultural Imports  

Bloomberg News is reporting on a story that China has proposed to import $30 billion of U.S. agricultural products on an annual basis.   
At the moment, the details are developing, but the comments are more concrete than in the past. The futures markets seem to be taking the news more seriously than previous reports that came from the White House.   
What Does This Mean for U.S. Farmers?  At the moment the news seems to be putting in a floor in corn is supportive wheat, corn, soy and hog futures. While the details are thin, the growing probability of China committing to some type of metric and providing a time frame is a positive.    

Kinder Morgan Expanding Chicago Argo Terminal Ethanol Capacity

Kinder Morgan will expand barge-loading capacity at its ethanol terminal in Chicago to help relieve a supply glut there that is driving down global prices for the biofuel.  

The move is designed to help clear the some of the building inventory levels that has helped suppress prices over the last few months.   

Tens of thousands of barrels of ethanol change hands at the Kinder Morgan Argo terminal daily, and prices there are used as the benchmark for deals across the country, and are also baked into international contracts.

Currently, Argo can unload roughly 120 to 150 tank cars of ethanol each week, or roughly 4 million gallons, and can load two barges, or roughly 1.2 million gallons, at a time.  

Plans to expand existing capacity include adding 50,000-gallon storage tank and increasing the barge loading/unloading capacity.  The increased capacity should help reduce the chances of a big supply glut at the 1.3-million-barrel storage hub.  

How Does This Impact the U.S. Farmer?  Adding capacity and increasing the loading and unloading efficiency to one of the largest ethanol hubs has the ability to help reduce the supply glut and support corn and ethanol cash and futures prices.  Modernizing the Argo terminal is a long term project, but moving ethanol out of the country to a large centralized shipping location has the possibility of providing long term support for regional corn basis.     

U.S. Wheat Not A Part of Egypt’s GASC 360,000-Ton Purchase  

Egypt’s commodity purchasing arm, GASC, purchased 360,00 tons of French and Romanian wheat.  

The purchase was made up of 180,000 tonnes of French wheat, 60,000 tonnes of Romanian wheat, 60,000 tonnes of Russian wheat and 60,000 tonnes of Ukrainian wheat.  

U.S. SRW and HRW offers were not included.     

What Does This Mean for U.S. Farmers? The lack of U.S. offers should be a concern and certainly reinforces FBN’s position that U.S. wheat is the residual supplier of wheat to the world. Apparently French wheat prices were consistently cut during the negotiation to help gain volume.  The current level of U.S wheat stocks the export volume of HRW in particular needs to accelerate soon.  

  

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