By: Dan Hueber –
“We recommend most farmers adjust their production and increase replenishment in a timely manner.” That was the statement issued by Tang Ke, the Chinese director of the agricultural market and information department. While phrased a little differently than someone from the USDA might have, (maybe it was mixed up in the translation), it is clear that the government in China very much wants to see hog production rebooted as quickly as possible. He went on to say that they expect to see higher prices for pork in that nation during the second half of the year and intend to import additional tonnage in the meantime, but they want to turn around this situation as quick and as humanly, or in this case, porcine-ly, possible. Now if they can only stop the ongoing spread of African Swine Fever.
While it is nice to see strength across the grain/soy markets this morning it hardly makes up for the way markets were punished yesterday. Obviously, longs have grown a bit weary of waiting for some type of fresh positive news and decided to get out of down. March corn posted its lowest close since Thanksgiving. By no means do I think that was a death sentence for this or any of these markets but would seem to suggest we have more time to spend toward the lower end of the overall trading ranges.
It did not seem to provide any help, but the bean market did receive a little positive news yesterday via the NOPA crush data. For the month of December, we crushed a record (for the month) 171.759 million bushels of soybeans. The previous high was set in December of 2017 at 166.305 and the figure was also above the trade expectations of 170.02. With the swollen stocks of beans we are faced with, this should be a solid year for the crush industry.
Providing a little counterbalance to any positive news were comments by Robert Lighthizer, the chief trade representative for the White House with the Chinese situation. He had met with Senator Chuck Grassley from Iowa last Friday and according to the Senator, Lighthizer commented that no significant progress was made on structural issues. Keep in mind that he is one of the more ardent “hawks” when it comes to taking a tough negotiating stance with China which may have colored his comments a bit.
It seems there is little else to be found in the news this morning. Macros lean a touch towards a negative influence with energies soft, metals flat and the dollar and equities higher. One of these days we will hopefully have a funded and functioning government and can begin to receive updates on export business and even a production and supply/demand update. Until then we will scratch for what we can find each day.