The Allendale Wake-Up Call

US - Canadian Negotiators Get Closer to a NAFTA Deal

Good Morning! From Allendale, Inc. with the early morning commentary for September 10, 2018.

Grain Market Traders wait for NAFTA news and the monthly USDA Supply & Demand report (this Wednesday at 11 pm CST). Canadian & US negotiators and their staff have held several late-night sessions in a bid to overcome disagreements last week. Negotiators have blown through several deadlines since the talks started in August 2017. Trump has notified Congress he intends to sign the trade deal reached last week with Mexico by the end of November, and officials said the text would be published by around Oct. 1.

Commitment of Traders Report on Friday estimated corn futures were buyers of 73 contracts last week with a net short position of -56,884. Soybeans futures were estimated sellers of 9,107 contracts with a net short position of -62,749. Chicago wheat futures were estimated sellers of 8,414 with a net long position of 42,766.

Weekly export sales on Friday morning showed corn export sales, both old and new crop combined, totaled 1,063,047 metric tonnes (30,108 for 2017/18 and 1,032,939 for 2018/19). This is within the 400,000 – 1,250,000 trade expectation. Soybean export sales totaled 673,213 metric tonnes (579 for 2017/18 672,634 for 2018/19). That was within the very wide 200,000 – 1,000,000 trade expectation. Wheat export sales were noted at 379,754 metric tonnes, all 2018/19. That was within the 200,000 – 500,000 trade expectation.

S&P 500 on Friday fell to a 2-week low and closing down -0.22%, Dow Jones -0.31%, Nasdaq 100 -0.31%. Heightened U.S./China trade tensions after President Trump remarked additional tariffs on $276 billion of Chinese goods could be added on short notice to the $200 billion of Chinese goods already targeted and weakness in energy stocks as crude oil prices put downside pressure on US stocks.

U.S. August Non-Farm Payrolls Report showed a 201,000 jobs, stronger than expectations of 190,000 jobs, and the August hourly earnings report increased 2.9%, stronger than expectations of 2.7% and the largest year-on-year increase in 9 years.

U.S. President Trump warned on Friday he was ready to slap tariffs on virtually all Chinese imports into the United States, threatening duties on another $267 billion of goods on top of $200 billion in imports primed for levies in coming days. (Reuters)

October Crude Oil and Gasoline on Friday settled mixed with October crude closing at a 2-week low [October crude oil -0.02 (-0.03%) and October gasoline 1.90 ( 1.97%)]. The downside pressure was caused by a stronger dollar and concerns emerging markets will slow global growth and energy demand.

Cattle Futures on Friday closed higher and finished the week up 1.08%. Oct cattle last Tuesday rallied to a 2-week high after the EU Commission recommended settling a dispute over the imports of U.S. beef. Cattle prices held their gains the rest of the week on strength in the cash market after cash cattle prices climbed to a 2-week high.

Lean Hog Futures rallied to a 2-week high and finished the week sharply higher by 10.36%. Fund short-covering lifted hog prices on concerns the spread of African swine fever in China may boost foreign demand for U.S. pork supplies as buyers withheld pork products from China. Hog packer profit margins soared to a new high on Wednesday, adding pressure to packer demand for hogs.

Dressed Beef values were lower on Friday with choice down 2.19 and select down 0.74. The CME Feeder Index closed at 152.90. Pork cutout values finished Friday lower higher up 0.79.