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The bean market could be getting its nose bent out of shape. (Or in this case, would that be nodes?) Regardless, it is the market often used to garnering all the attention and excitement, and without question, wheat has assumed that role as of late.  Yes, wheat futures have set back a smidge this morning, but this after double-digit gains yesterday and the appearance of a market that wants to extend what has already been a nearly seven-month advance.  As I noted yesterday, additional reductions in the Australian crop size helped to get the ball rolling, and now we hear predictions that the potential crops in Ukraine and Russian could be less than expected.  The independent consultant ProAgro now predicts that the Ukraine grain harvest could drop 3.2% from last year to 72.67 MMT primarily due to lower sowing of winter wheat, and the Russian Ag ministry is looking for a 3 to 5% reduction from last year in their wheat output.  Not exactly major adjustments, but little by little, we seem to be chipping away at the global stockpiles.

Even though you would not have recognized it from the price performance, the bean market was not devoid of positive news.  As I reported yesterday, the Chinese government appears to be doing what they can to stimulate import business by dropping tariffs on products from the U.S. and will be accepting applications for imports on such beginning March 2nd. In addition to that, export inspection bounced back nicely to 992k M.T., including three cargos to China, and the January NOPA crush came in at nearly a record.  For the month, the industry crushed 176.94 million bushels, up from 174.81 in December and trade expectations of 173.75.  One has to suspect that the lack of new business from China could at least be psychologically discouraging for would-be bulls at this time, but that said, once it does arrive could provide a disproportionate bounce as well.

There is one other item that could be weighing on the bean and corn markets right now, and that is the performance in the commodity arch-nemesis; the U.S. Dollar.  The outbreak of the coronavirus and the uncertainty of the impact it could have on the Chinese and global economy (Apple’s profit warning yesterday) appears to have sent buyers scurrying to the Dollar as a safe haven until more is known.  With the additional buying this week, the Dollar has pushed through the 2019 highs.  Assuming the uncertainties surrounding the coronavirus will be put at ease sooner than later, I suspect the dollar strength will be short-lived as well; in the meantime, it creates headwinds for us.

Hormel Foods has now joined Tyson Foods and JBS with a new policy in which they will not accept any hogs for slaughter that have been fed the drug ractopamine.  It is legal to use this substance in the United States, Canada, and Mexico but is banned in 160 other countries, including China, who will not allow the import of pork in which it has been fed.  It is difficult to get a great handle on the number of pigs in the U.S. where this additive is still in the diet, but I have seen estimates of anywhere from 50% to 80%, but those upper-end estimates seem high.  That said, there is an old rule in the business world that says you need to provide the customers with what they want, and if we want to tap further in the Chinese trade, it will be a challenge to do so with a banned product.  Needless to say, Elanco, the company that manufactures this additive, expressed “disappointment.”